ADP data is unexpectedly weak, analysis of short-term trend of spot gold, silver, crude oil and foreign exchange on February 4

Global market overview

1. European and American market conditions

The three major U.S. stock index futures rose or fell mixedly, with the Dow futures rising 0.25%, the S&P 500 futures rising 0.19%, and the Nasdaq futures falling 0.11%. Germany's DAX index fell 0.23%, Britain's FTSE 100 index rose 1.21%, France's CAC 40 index rose 0.95%, and Europe's Stoxx 50 index rose 0.24%.

2. Interpretation of market news

ADP data was unexpectedly weak, and the "low temperature operation" of the U.S. labor market continued

⑴ The latest data showed that the number of private sector employment in the United States increased by only 22,000 in January, significantly lower than the market expectation of 48,000, and the data in December last year was revised down to 37,000. ⑵ This data is jointly www.xmtraders.compiled by ADP and the Stanford Digital Economy Laboratory, but the accuracy of forecasts of official non-farm employment data has historically been low. ⑶ The U.S. Department of Labor’s more www.xmtraders.comprehensive and more closely watched January employment report, originally scheduled to be released on Friday, was delayed due to the recent partial shutdown of the federal government. ⑷ Economists describe the current state of the labor market as "low hiring, low firing" and attribute this in part to Trump's tariff remarks and the rise of artificial intelligence technology. ⑸ Federal Reserve Chairman Powell noted last week that labor market indicators indicate that conditions may be stabilizing after experiencing a gradual slowdown. ⑹ The Federal Reserve kept its benchmark overnight interest rate unchanged at the range of 3.50%-3.75% at its recent meeting. ⑺The market will carefully analyze this data. Although its predictive value is limited, it still strengthens the general impression that the growth momentum of the job market is weakening. ⑻The future focus will beTurning to the delayed official non-farm payrolls report, the data will be a more critical basis for assessing the health of the economy and the path of Fed policy.

The stickiness of wages is highlighted: the larger the www.xmtraders.company, the higher the salary increase.

⑴The median annual salary of those who stayed in the United States increased by 4.5% year-on-year in January, and the growth rate was basically the same as last month, showing that salary growth is sticky. ⑵ The salary growth rate of job-changers has slowed slightly to 6.4%, but is still significantly higher than that of job-stayers, indicating that channels for obtaining higher salaries by changing jobs still exist. ⑶Looking at different industries, salary growth is relatively balanced, with those in the financial activities industry (5.2%) and manufacturing (5.0%) taking the lead in salary increases. ⑷The salary growth rate in the information industry (4.1%) and other service industries (4.1%) is relatively low, but still remains above 4%. ⑸The most significant differentiation is reflected in the size of the enterprise: the salary increase of those staying in large enterprises (more than 500 people) reaches 5.0%, while the salary increase of the smallest enterprises (1-19 employees) is only 2.5%. ⑹ The salary growth rate is significantly positively correlated with the size of the enterprise. The salary growth rate (4.7%-4.8%) of medium-sized enterprises (50-499 people) is also higher than the industry average. ⑺This model shows that large www.xmtraders.companies with stronger pricing power and more stable cash flow have an advantage in maintaining wage www.xmtraders.competitiveness. ⑻Despite the slowdown in employment growth, broad wage pressures have not disappeared, especially wage rigidity from large enterprises, which may continue to support core services inflation.

India’s oil purchases have plummeted, and Russia’s fiscal deficit may soar to nearly three times the target

⑴ According to internal estimates cited by sources close to the government, Russia’s fiscal deficit may reach 3.5%-4.4% of GDP in 2026, which is almost three times the official 1.6% target. ⑵ The main reason for the widening deficit is that energy revenue is expected to be 18% lower than the government plan, while expenditures may be higher than expected. ⑶A key assumption is that India’s oil purchases may decrease by 30% in 2026. ⑷ Due to Western sanctions, Russian oil needs to be sold at a discount of more than 20% from the international benchmark price. This, coupled with the sharp appreciation of the ruble against the US dollar last year, has jointly eroded oil tax revenue denominated in US dollars but settled in rubles. ⑸The latest data shows that Russia’s budget energy revenue has halved to 393.3 billion rubles in January, the lowest level since July 2020. ⑹ Russia currently has 4.1 trillion rubles in fiscal reserves that can be used to cover the deficit, but analysts estimate that at the current rate of revenue decline, these reserves may be significantly exhausted within a year. ⑺ Sources pointed out that although this does not mean an economic disaster, it will require a policy response from financial authorities, such as possibly proposing spending cuts, which may be the wrong move during an economic slowdown. ⑻Russian senior leaders regard budget balance as a key barrier against Western sanctions, but some assumptions in the current budget (such as small reductions in military spending) are considered "unrealistic." ⑼ The market needs to pay close attention to Russia's policy choices under fiscal pressure, including whether to adjust the "oil benchmark price" in the budget rules or use more reserves, which will have an impact on the ruble exchange rate and the country's assets.have a direct impact on asset risk premiums.

The "reverse poaching" of technology giants has been severely investigated, and AI www.xmtraders.competition faces new antitrust regulations

⑴ Three U.S. Democratic senators jointly wrote to the Federal Trade www.xmtraders.commission and the Department of Justice, calling for a review of artificial intelligence transactions by technology giants such as Nvidia, Meta and Google. ⑵ Senators urged antitrust agencies to focus on examining a special type of recent transactions: technology www.xmtraders.companies pay to "poach" specific key employees from start-up www.xmtraders.companies, but do not acquire the target www.xmtraders.company as a whole. ⑶ They describe such transactions as "reverse merger-style poaching" and believe that they essentially function as a de facto merger. ⑷ Senators pointed out that such transactions allow large www.xmtraders.companies to www.xmtraders.combine talent, information and resources, while apparently trying to circumvent the strict regulatory scrutiny that usually applies to formal mergers and acquisitions transactions. ⑸The letter requires the Federal Trade www.xmtraders.commission and the Department of Justice to conduct a strict review of these transactions, and if they are determined to violate antitrust laws, they should be blocked or revoked. ⑹ This trend shows that regulatory agencies are paying close attention to possible new market integration behaviors in the AI ​​field that are designed to circumvent traditional antitrust review. ⑺In the future, technology giants’ strategy of consolidating their advantages in the AI ​​field through talent acquisition rather than www.xmtraders.company mergers and acquisitions may face higher legal and regulatory risks.

The "bear steep" signal reappears, and the U.S. bond yield curve sounds a fiscal alarm

⑴The difference between the U.S. 2-year and 10-year Treasury bond yields is currently about 69 basis points, approaching the four-year high of 74 basis points hit in April 2025. ⑵ Over the past week, the spread has widened significantly from the recent low of 61 basis points. ⑶ Since the beginning of the year, the 10-year yield has continued to rise, mainly due to market uncertainty about U.S. debt issuance arrangements. ⑷In contrast, the 2-year yield, which is more sensitive to monetary policy, has remained relatively stable. ⑸ U.S. Treasury Secretary Bessent’s goal of lowering yields is in conflict with the fiscal situation of the United States and the past statement of the nominee for chairman of the Federal Reserve, Warsh, who “wants to reduce the Fed’s balance sheet.” ⑹ This steepening of the yield curve driven by rising long-term interest rates is often referred to as "bear market steepening" and is often interpreted as a signal of increasing fiscal pressure. ⑺ Higher long-term yields will directly increase the government’s debt interest burden and increase the long-term borrowing costs of enterprises and individuals. ⑻ This may force the Ministry of Finance to rely more on short-term bonds for future financing, thereby making government finances more exposed to the risk of short-term fluctuations in borrowing costs. ⑼Investors are paying close attention to the upcoming quarterly refinancing plan of the U.S. Treasury Department for clear clues on the scale and structure of future government debt issuance.

Israel put forward "four key demands" on the US-Iran negotiations

According to a report from Israel's Channel 12 TV station on the evening of the 3rd, Israel urged the United States to adhere to "four key demands" in the upcoming negotiations with Iran. The report quoted a senior Israeli diplomat as saying that Israel insisted that the United States not give in on "four key demands": requiring Iran to transfer its highly enriched uranium materials to other countries, www.xmtraders.completely stop uranium enrichment activities, and stop production.Ballistic missiles, stop funding “anti-Israel proxies” in the Middle East. The diplomat said: "Israel has exerted influence on the negotiations between the two countries in the past, and will continue to exert influence this time."

Peskov: The Kremlin does not intend to make a statement on the second round of Russia-U.S.-Ukraine negotiations

On February 4, Russian Presidential Press Secretary Peskov stated at a regular telephone press briefing that Russia's door to peacefully resolve the situation in Ukraine is still open, but since Kiev has not yet made a corresponding decision, Russia will continue to carry out special military operations. He pointed out that the targets of the Russian army's strikes were those facilities considered to be related to the Ukrainian military system. Peskov said that the Kremlin does not intend to make a statement on the second round of Russia-U.S.-Ukraine negotiations in Abu Dhabi. Both Kiev and Washington are aware of Russia's position on the Ukraine issue. Russia expressed its gratitude to the U.S. negotiators for their efforts in resolving the Ukrainian issue.

Iran’s Golestan Palace announces suspension of opening to the public

On February 3, local time, the Golestan Palace, a world cultural heritage located in Tehran, the capital of Iran, announced that due to the current situation, it will temporarily suspend its opening to the public until further notice. The closure covers all exhibition halls and areas in the Golestan Palace www.xmtraders.complex. The Golestan Palace is located in the center of Tehran and is also known as the Rose Palace. The palace has a unique architectural style and can be called the essence of Iranian architecture. It attracts many tourists from all over the world to visit every year.

The double risk aversion of war and central bank independence, the logic of gold's surge

⑴ After hitting its largest one-day rise in 17 years on Tuesday, gold prices continued to rise on Wednesday as new geopolitical tensions between the United States and Iran prompted investors to flock to safe-haven assets. ⑵ As of Tuesday (17:45 Beijing time), spot gold rose 2.4% to US$5,057.50 per ounce, after rising 5.9% on Tuesday. ⑶ The price of U.S. gold futures for April delivery rose 3% to $5,080.90 per ounce. ⑷ Analysts pointed out that what drives demand is the superposition of multiple risk factors: first, questions surrounding the independence of the central bank, and second, escalating geopolitical risks. ⑸In terms of specific incidents, the U.S. military said on Tuesday it shot down an Iranian drone that "provocatively" approached the USS Lincoln aircraft carrier in the Arabian Sea, just as diplomats were trying to arrange U.S.-Iran nuclear negotiations. ⑹ At the same time, Trump’s remarks that Federal Reserve Chairman Powell should be “thoroughly investigated” once again triggered market concerns about the independence of the Federal Reserve. ⑺Gold is regaining lost ground. Gold prices fell to $4,403.24 on Monday, experiencing the most severe two-day sell-off in decades, after Trump nominated Warsh as chairman of the Federal Reserve and the Chicago Mercantile Exchange raised margins. The current price of gold is still rising by more than 17% during the year. ⑻Investors will pay close attention to the U.S. ADP private employment data released later for clues on the Fed's policy path. The market currently expects the Federal Reserve to cut interest rates at least twice in 2026. ⑼ Some analysts believe that given that the Federal Reserve may still cut interest rates further this year, this will support gold prices later this year.reached $6,200 per ounce. ⑽ At the same time, spot silver rose 4.5% to $88.90 an ounce on Wednesday, while platinum and palladium also rose 3.4% and 4.9% respectively.

The political landscape has set a loose tone, and selling pressure on the yen is accumulating again

⑴ Analysts at Bank of Mitsubishi UFJ pointed out that the yen fell to a nearly two-week low against the US dollar as the market became increasingly confident that Prime Minister Sanae Takaichi will successfully consolidate his power in Sunday's snap election. ⑵The latest poll from the "Asahi Shimbun" shows that the Liberal Democratic Party led by Takaichi Sanae may gain a majority in the House of Representatives. ⑶ This result will provide stronger public opinion authorization for Gaoshi Sanae to continue to implement its expansionary fiscal and monetary policies. ⑷The clarity of the political outlook has directly encouraged the resurgence of speculative selling against the yen. ⑸ Analysts believe that as the U.S. dollar-yen exchange rate approaches the 160 mark, the selling trend may continue even if the risk of direct intervention by the Japanese Ministry of Finance to support the yen increases. ⑹ On Tuesday, the U.S. dollar exchange rate against the Japanese yen once rose 0.7%, reaching a maximum of 156.80 yen. ⑺ The market is pricing in a longer-term and more determined Japanese easing policy environment, which is in sharp contrast to the trend of major developed economies that may maintain high interest rates, and constitutes the core logic of the Japanese yen's weakness.

Liquidity remains abundant, and the surge in ECB deposits reveals the market's "risk aversion" mentality

⑴ Data released by the European Central Bank on Tuesday showed that financial institutions borrowed only 1 million euros through the overnight lending mechanism. ⑵ In sharp contrast, the total deposits under the overnight deposit mechanism are as high as 2.45359 trillion euros. ⑶ This shows that the banking system has extremely abundant liquidity, and institutions prefer to safely store funds in the central bank rather than engage in interbank lending or put them in risk markets. ⑷The current account holdings also remain at a high level of 1.60007 billion euros, further confirming the market's cautious sentiment. ⑸The amount of overnight deposits increased slightly www.xmtraders.compared with the previous day's data (2.438721 trillion euros), indicating that the risk aversion tendency continues. ⑹ Such a huge amount of funds deposited in the central bank reflects the bank's cautious attitude towards the market outlook and its advance defense against potential risks in the future (such as liquidity constraints or asset price fluctuations). ⑺This may suppress short-term money market interest rates and may indicate limited willingness to expand credit. We need to pay attention to its potential impact on credit transmission in the real economy.

Turkey and Saudi Arabia sign a US$2 billion renewable energy investment agreement

On February 3, local time, Turkey and Saudi Arabia signed an intergovernmental renewable energy investment agreement in the Saudi capital Riyadh. Saudi Arabia will invest approximately US$2 billion to build solar and wind power projects in Türkiye with a total installed capacity of 5,000 megawatts. According to the agreement, the relevant projects will be implemented and constructed by Saudi www.xmtraders.companies in Turkey. In the first phase, solar power stations with a total capacity of approximately 2,000 MW are planned to be built in Sivas and Karaman provinces in central Turkey. Türkiye’s Ministry of Energy and Natural Resources stated that project funds will mainly be through international financial institutions.Completed with external financing and credit support provided by institutions.

The suspension of the launch of the "Falcon 9" rocket may affect the US manned space launch arrangement

The "Falcon 9" rocket of the US Space Exploration Technology www.xmtraders.company experienced an abnormality during the "Starlink" satellite launch mission on the 2nd. The www.xmtraders.company subsequently announced that it would suspend subsequent launches of the Falcon 9 until the cause was identified and rectifications www.xmtraders.completed. This move may affect the manned space launch mission planned by the United States in the near future. In the launch mission on the 2nd, the "Falcon 9" rocket successfully placed 25 "Starlink" satellites into predetermined low-Earth orbit. However, after the satellite deployment was www.xmtraders.completed, an abnormality occurred in the second stage of the rocket while preparing for deorbit ignition, and the second stage was subsequently passivated according to the design process. The mission team is reviewing and evaluating relevant data to clarify the cause of the failure and formulate corresponding corrective measures. Until then, subsequent launch missions of the "Falcon 9" rocket will be suspended. The grounding www.xmtraders.comes as SpaceX and NASA prepare for a new phase of manned space missions. According to the plan, the Space Exploration Technology www.xmtraders.company's Dragon spacecraft will be launched from the Cape Canaveral Space Force Station in Florida on February 11 aboard a Falcon 9 rocket to carry out an astronaut rotation mission to the International Space Station code-named "Crew-12", carrying four astronauts to the International Space Station.

3. Trends of major currency pairs before the New York market opens

EUR/USD: As of 21:20 Beijing time, EUR/USD fell and is now at 1.1816, a decrease of 0.01%. Before the New York market opened, the price of EURUSD fell on the last trading day. After reaching overbought levels, the price began to form a negative divergence relative to the price trend. From there, negative signals appeared. As trading was below the EMA50, negative pressure continued and bearish correction waves dominated in the short term.

GBP/USD: As of 21:20 Beijing time, GBP/USD has risen and is now at 1.3714, an increase of 0.14%. Before the New York market opens, GBPUSD rose in the last intraday session, supported by positive signals from the relative strength indicator. As the price remains under negative pressure as it trades below the EMA50, dominated by a short-term steep bearish correction wave, these last gains are considered to be an attempt to recover some of the previous losses.

Spot gold: As of 21:20 Beijing time, spot gold has risen and is now trading at 5053.50, an increase of 2.19%. Gold prices fell on the last trading day before the New York market opened, as resistance at the EMA50 was reached, after reaching overbought levels that were exaggerated www.xmtraders.compared to the price action, which caused the price to succumb to negative pressure, with steep bearish correction waves dominating on a short-term basis.

Spot silver: As of 21:20 Beijing time, spot silver has risen, now trading at 90.624, an increase of 6.60%. In the New York pre-market, despite reaching overbought levels to retest the psychological resistance of $90.00 and retesting the previously broken short-term major bullish trend, negative pressure continues as trading below EMA59 reduces the chances of a full recovery in the near term, but (silver) prices are rising at the last intraday level on the support of positive signals from the relative strength indicator.

Crude oil market: As of 21:20 Beijing time, U.S. oil rose, now trading at 63.390, an increase of 0.28%. Crude oil prices have spent the last trading session lower in the New York pre-market to collect gains from its previous rise as current resistance stabilizes at $63.50 in an attempt to gain bullish momentum that may help break through this resistance. Price is trying to escape some clear overbought conditions on the relative strength indicator, especially with the emergence of negative signals, the persistence of dynamic support represented by trading above the EMA50, strengthening the chances of price recovery on a near-term basis, especially when trading along the main bullish trend line on a short-term basis.

4. Institutional perspective

ING: Eurozone inflation data is expected to have a limited impact on the European Central Bank’s decision

⑴ ING pointed out that before the European Central Bank’s interest rate meeting on Thursday, the last important data is the preliminary value of the Eurozone’s January consumer price index released today. ⑵ The bank said that French inflation data unexpectedly fell on Tuesday, but had little impact on the foreign exchange market. Therefore, they also doubt whether the overall inflation data for the euro zone released today has sufficient market influence. ⑶The current market expectation is that the inflation rate will slow down from 1.9% to 1.7%, and core inflation is expected to remain unchanged at 2.3%. ⑷The bank believes that such data is not enough to prompt the European Central Bank to significantly adjust its policy language at tomorrow's meeting. ⑸EUR/USD has rebounded to about 1.183, which is about 0.8% higher than the bank’s estimated short-term fair value. ⑹ ING finally pointed out that if today’s judgment that the US data performed relatively well is correct, then the euro against the dollar may face downward pressure in the next few days, or fall below the 1.18 level again.

The above content is all about "[XM Foreign Exchange Decision Analysis]: ADP data is unexpectedly weak, short-term trend analysis of spot gold, silver, crude oil, and foreign exchange on February 4". It is carefully www.xmtraders.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!

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