EUR/JPY Extends Decline Below 157.00 on BoJ Hike Bets

Gold prices rose to a record high on Thursday as investors turned to bullion for safety on fears US President Donald Trump's tariff plans would stoke inflation and a global trade war.

Spot gold was up 0.5% at US$2,945.83 an ounce, as of 0621 GMT, after hitting a record high of US$2,947.11 earlier in the session.

Bullion has risen 12% so far this year and hit a fresh peak for the tenth time on Trump tariff fears.

US gold futures GCcv1 gained 0.9% to US$2,963.80 on Thursday.

"Uncertain outlooks for both global trade and inflation are proving to be conducive for gold and are acting to bring the US$3,000 level within range," said Tim Waterer, chief market analyst at KCM Trade.

Since his inauguration, Trump has imposed a 10% tariff on Chinese imports and a 25% tariff on steel and aluminium. He said on Wednesday he would announce tariffs related to lumber, cars, semiconductors and pharmaceuticals "over the next month or sooner."

Minutes of the Federal Reserve's last policy meeting showed on Wednesday that Trump's initial policy proposals raised concerns about higher inflation and affirmed a continued pause on rate cuts.

Despite chances of fewer rate cuts this year, market participants maintain their overall bullish outlook for gold.

"Gold has and should continue to benefit from robust physical market demand, underpinned by resilient central bank purchases and as physical gold ETFs transition from sellers to marginal buyers," said Trevor Yates, analyst at Global X.

Gold is seen as a hedge against geopolitical risks and inflation, but higher interest rates dampen the non-yielding asset's appeal.

"If we look at potential risks which could slow gold prices down, safe-haven demand could dry up somewhat if a peace deal moves closer to fruition between Russia and Ukraine," Waterer said.

Trump denounced Ukrainian President Volodymyr Zelenskiy as a "dictator" on Wednesday and warned he had to move quickly to secure peace or risk losing his country.

Spot silver firmed 0.5% to US$32.88 an ounce. Platinum gained 0.4% to US$976, while palladium rose 0.6% to US$973.87.

Source: Theedgemarkets

Wingstop (NASDAQ:WING) stock was getting crushed on Wednesday, dropping some 15% to $260 per share after the chicken wing chain reported fourth quarter earnings.

The Q4 numbers looked impressive when compared to the same quarter a year ago. Revenue spiked 27% year over year to $162 million, but that was below estimates of $165 million.

Net income surged 42% to $27 million, or 92 cents per share, which exceeded analysts’ estimates of 89 cents per share.

System-wide sales were up 28% to $1.2 billion. That includes all sales, from both franchises and the stores that Wingstop owns. Same-store sales, which are sales from locations that have been open at least a year, rose 10%. Meanwhile, the average unit volume (AUV), which is the average sales of all restaurants that have been open at least a year, rose 17% to $2.1 million.

In addition, the company opened 105 new restaurants in the quarter. For the full fiscal year, Wingstop had 358 net new openings, bringing the total to 2,563 worldwide locations, up 16% from the previous year.

Of that total, 2,204 restaurants are in the United States with 2,154 of them franchised and 50 were company-owned.

Is this a buying opportunity?

The extent of the drop in stock price may seem a bit overblown, given that it wasn’t a huge revenue miss and earnings beat expectations.

There may have also been some disappointment with projections of low- to mid-single digit domestic same store sales growth. That would be considerably lower than the 19.9% jump in fiscal 2024.

Further, selling, general, and administrative costs are expected to reach $140 million, up about 20% and on pace with the previous year.

So, while there are some concerns, the bigger issue is Wingstop’s high valuation. It has been an excellent and consistent stock over the years, averaging a 25% return over the past 10 years and 20% over the past five years.

That has led to a high valuation, with a P/E ratio of about 89. The P/E has come down over the past year as the stock has dropped about 18% over the past 12 months, but it is still high. In today’s selloff, investors probably saw the revenue projections as too low to justify the high price.

This dip was probably overdue, but I still don’t think the stock is in the buy range. Wingstop is a good company and it’s a stock to put on your radar, but just wait for things to settle a bit more.

That said, analysts’ love it, as it has a median price target of $364 per share and is considered a buy across the board. So, as always, do your own research. 

Source: FXSTREET

USD/CHF attracts some sellers and snaps a three-day winning streak amid renewed USD selling.

Trump’s fresh tariff threats weigh on the global risk sentiment and benefit the safe-haven CHF. 

The Fed’s hawkish outlook could act as a tailwind for the USD and help limit losses for the pair.

The USD/CHF pair meets with some supply during the Asian session on Thursday and for now, seems to have snapped a three-day winning streak to the weekly top, around the 0.9055 area touched the previous day. Spot prices currently trade near the lower end of the daily range, around the 0.9025 region, and seem vulnerable to sliding further.

US President Donald Trump said on Wednesday that he will announce tariffs on a number of products next month or even sooner. This fuels concerns about a global trade war and tempers investors' appetite for riskier assets, which is evident from a generally weaker tone around the equity markets and benefits traditional safe-haven currencies, including the Swiss Franc (CHF). Apart from this, the emergence of some US Dollar (USD) selling exerts downward pressure on the USD/CHF pair.

The global flight to safety triggers a fresh leg down in the US Treasury bond yields and to a larger extent, overshadows hawkish FOMC minutes released on Wednesday. This, in turn, fails to assist the USD Index (DXY), which tracks the Greenback against a basket of currencies, to build on its bounce from the vicinity of a two-month low tested earlier this week. That said, expectations for an extended pause on rates by the Federal Reserve (Fed) could support the buck and the USD/CHF pair. 

Hence, it will be prudent to wait for strong follow-through selling before confirming that the currency pair's recovery from the 0.8970-0.8965 horizontal support, or the year-to-date low has run out of steam. Traders now look forward to Thursday's US economic docket – featuring the release of the usual Weekly Initial Jobless Claims and the Philly Fed Manufacturing Index. Apart from this, speeches by influential FOMC members might influence the USD price dynamics and the USD/CHF pair.

Source: FXSTREET

SHANGHAI (Feb 20): China's yuan strengthened against the dollar on Thursday, as market sentiment improved after US President Donald Trump said a new trade deal with Beijing was possible.

Renewed tariff threats under the Trump administration have been weighing on the yuan in recent months, and the president's latest comment eased investor worries about a further deterioration in the Sino-US trade tensions in the short term, currency traders said.

During Trump's first term as president, a series of tit-for-tat US-China tariff announcements drove the yuan down more than 12% against the dollar between March 2018 and May 2020.

As of 0331 GMT, the onshore yuan was 0.07% higher at 7.2724 to the dollar, while its offshore counterpart traded at 7.2731.

Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1712 per dollar, and 1,144 pips firmer than a Reuters estimate of 7.2856.

The central bank has set its official guidance on the firmer side of market projections since mid-November, which analysts and traders see as a sign of unease over the yuan's decline.

The yuan's strength also comes as authorities face a delicate balancing act between financial and currency stability and monetary easing, traders and analysts said.

China left lending benchmark loan prime rates (LPRs) unchanged for the fourth straight month in February.

"The US's relatively mild 10% tariffs on Chinese goods, with room for trade negotiation, suggested that the trade war shocks could be more affordable to China, reducing the urgency for immediate rate cuts," said Ken Cheung, chief Asian FX strategist at Mizuho Bank.

Meanwhile, the state-owned Economic Daily said on Thursday that the central bank's recent improvements to its macroprudential policy toolbox were a key initiative for preventing and fending off financial risks and maintaining the stability of financial markets.

"The global economic and financial situations remain severe and complex, with the adverse impact of changes in the external environment deepening and factors of instability and uncertainty clearly increasing," the newspaper said in an editorial.

The newspaper listed examples of improvements including the central bank's recent move to boost capital flows by allowing companies to borrow more overseas and the regular issuance of yuan bills in Hong Kong to stabilise foreign exchange market expectations and increase market resilience.

Source: Theedgemarkets

EUR/USD gains ground to around 1.0430 in Thursday’s early European session.

The pair keeps the positive outlook above the 100-period EMA with a bullish RSI indicator. 

The immediate resistance level emerges at 1.0461; the first downside target is seen at 1.4936. 

The EUR/USD pair recovers some lost ground to near 1.0425 during the early European trading hours on Thursday. The weakening of the US Dollar (USD) provides some support to the major pair. However,  tariff concerns from US President Donald Trump and geopolitical tension.

Technically, the bullish outlook of EUR/USD remains intact as the major pair holds above the key 100-period Exponential Moving Averages (EMA) on the 4-hour chart. However, the Relative Strength Index (RSI) is located below the midline, near 42.85, suggesting that further downside cannot be ruled out. 

The first upside barrier for EUR/USD emerges near 1.0461, the high of February 19. The key resistance level to watch is the 1.0500-1.0505 zone, representing the psychological level and the upper boundary of the Bollinger Band. A decisive break above this level will see a rally to 1.0533, the high of January 27. 

On the other hand, the crucial support level for the major pair is seen at 1.0410, the confluence of the 100-period EMA, and the lower limit of the Bollinger Band. A breach of this level will see a drop to 1.0352, the low of February 6. The additional downside filter is located at 1.0285, the low of February 10. 

EUR/USD 4-hour chart

Source: FXSTREET