Errante’s The Week Ahead: 10th – 14th February 2025 

Highlights of the Week: 

• Powell’s Testimony and Inflation Data: Focus on how recent NFP and CPI readings influence Fed policy. 

• UK GDP and Economic Narrative: Evaluation of the UK economy post-BoE rate cut. 

• Gold Hits New All-Time High: Bullish momentum amid economic uncertainties. 

Errante’s The Week Ahead: 10th – 14th February 2025

This week, market attention is firmly on inflation data and central bank narratives, with Federal Reserve Chair Jerome Powell’s testimony serving as a key event. Following a robust non-farm payroll (NFP) report and ahead of the upcoming Consumer Price Index (CPI) release, Powell’s remarks will be closely scrutinized for policy implications.  

The labor market’s resilience remains a focal point for the Federal Reserve as it assesses the trajectory of monetary policy. While job gains were softer than expected in January, the underlying data indicate a labor market that remains relatively tight, with wage growth outpacing inflation and participation holding steady. The unemployment rate stood at 4.0%, slightly below estimates, reinforcing the Fed’s position that immediate rate cuts may not be warranted.  

However, revisions to prior payroll data suggest that employment growth in 2024 was 589,000 jobs lower than initially reported, raising questions about the true strength of labor demand. These revisions, combined with structural shifts in employment—such as declines in mining, oil and gas extraction, and manufacturing—could temper policymakers’ optimism about the sustainability of the current labor market conditions. 

Looking ahead, uncertainty surrounding the Trump administration’s policy direction adds another layer of complexity to the economic outlook. The potential downsizing of the federal workforce and stricter immigration policies could dampen labor supply, particularly in sectors reliant on foreign-born workers.  

The latest Census Bureau population adjustments highlighted the role of immigration in supporting labor market expansion, with foreign-born workers contributing significantly to employment growth. Should these policies lead to tighter labor market conditions, wage inflation could accelerate, further complicating the Fed’s decision-making process. Meanwhile, market expectations remain anchored around a 75-basis-point rate cut this year, contingent on continued disinflation and a moderation in economic activity. Fed policymakers will need to strike a delicate balance between sustaining economic momentum and ensuring that inflation does not reignite amid shifting labor market dynamics. 

Inflation is projected at 0.2% month-over-month (m/m) and 2.9% year-over-year (y/y), remaining within a range that sustains policy uncertainty. Powell is likely to adopt a measured stance, weighing strong labor market conditions against persistent inflation risks. Market participants will be particularly attentive to any indications of a policy shift, especially in light of mounting political pressure from former President Trump for the Fed to ease rates further. 

In the UK, Gross Domestic Product (GDP) data will provide critical insights into the economic impact of the Bank of England’s (BoE) recent 25-basis-point (bps) rate cut. Forecasts suggest a 0.1% m/m expansion and 0.0% quarter-over-quarter (q/q) growth, reflecting subdued economic momentum. These figures are expected to highlight ongoing challenges, including sluggish consumer spending and weak business investment. The GBP/USD remains under pressure within a descending channel, with a downside bias should economic data fall short of expectations. 

Meanwhile, gold continues to rally, currently trading near $2,873 per ounce, bolstered by persistent economic uncertainties, geopolitical risks, and a weakening U.S. dollar. The metal’s safe-haven appeal remains intact, supported by inflation concerns and ongoing central bank interventions. Any dovish signals from the Federal Reserve could further reinforce bullish sentiment in gold. 

Upcoming Data and Events: 

Times are in GMT+2. 

Monday, February 10, 2025: 

• Tentative – CNY – New Loans: Insight into China’s credit activity and economic stimulus. 

Tuesday, February 11, 2025: 

• 2:15 PM – GBP – BoE Gov Bailey Speaks: Governor Bailey may outline strategies following the recent rate cut. 

• 5:00 PM – USD – Fed Chair Powell Testifies: Key testimony focusing on inflation control and labor market developments. 

Wednesday, February 12, 2025: 

• 3:30 PM – USD – Core CPI m/m: Insights into inflationary pressures excluding volatile food and energy prices. 

• 3:30 PM – USD – CPI y/y: A measure of annual inflation trends impacting Fed policy. 

• 5:00 PM – USD – Fed Chair Powell Testifies: Continuation of his economic policy outlook before Congress. 

• 5:30 PM – USD – Crude Oil Inventories: Weekly update on US oil stockpiles and potential impact on crude prices. 

Thursday, February 13, 2025: 

• 4:00 AM – NZD – Inflation Expectations q/q: Forward-looking gauge of inflation expectations in New Zealand. 

• 9:00 AM – GBP – GDP m/m: Monthly performance of the UK economy, critical for understanding growth momentum. 

• 9:00 AM – GBP – Prelim GDP q/q: Preliminary quarterly GDP growth data reflecting broader economic trends. 

• 9:30 AM – CHF – CPI m/m: Monthly change in Swiss consumer prices, key for SNB policy outlook. 

• 3:30 PM – USD – Core PPI m/m: Measure of producer-level inflation excluding food and energy. 

• 3:30 PM – USD – PPI m/m: Broader producer inflation metric, indicating cost pressures in production. 

• 3:30 PM – USD – Unemployment Claims: Weekly data on initial jobless claims, reflecting labor market strength. 

Friday, February 14, 2025: 

• 3:30 PM – USD – Core Retail Sales m/m: Indicator of underlying retail activity, excluding automobiles. 

• 3:30 PM – USD – Retail Sales m/m: Broad measure of consumer spending and economic health. 

Market Insights: Key Charts to Watch 

Gold – Weekly Chart: 

Gold’s bullish momentum continues, achieving a new all-time high of $2,873 per ounce. The metal remains in a strong upward channel, with Bollinger Bands expanding to accommodate increased volatility. RSI at 72.77 indicates overbought conditions, though bullish momentum persists. Factors driving gold’s rally include: 

• Weakening USD amidst geopolitical uncertainties. 

• Inflation concerns bolstering safe-haven demand. 

• Central bank purchases adding to support. 

Alternative Scenario:  

A pullback below $2,790 may test lower supports at $2,693 and $2,536, driven by profit-taking or easing geopolitical tensions. 

Key Levels: 

• Support: $2,790.12, $2,693.33, $2536.75 

• Resistance: $2,946.70, $3,043.49 

CHF/JPY – Weekly Chart: 

CHF/JPY has broken below a symmetrical triangle pattern, signaling potential downside. The pair targets 127.20% Fibonacci extension at 165.92 and 161.80% at 163.23. JPY strength stems from: 

• Safe-haven flows amid global uncertainty. 

• Narrowing yield differentials as Japan’s ultra-loose policy persists. 

• Swiss franc’s relative weakness as risk sentiment improves. 

Alternative Scenario:  

A reversal above 171.00 could lead to renewed bullish momentum, targeting the upper boundary of the triangle at 175.81. 

Key Levels: 

• Support: 165.92, 163.23, 160.26 

• Resistance: 171.00, 175.81 

Errante’s Weekly Newsletter brings you critical market insights to keep you ahead in the financial world. Stay informed and make strategic decisions with Errante. 

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