Gold Price Analysis – Gold Continues To See Support At $5000 Despite Pullback

The Mexican peso is one of the world's best-performing emerging market currencies this year, yet it faces a critical test this summer: a high-stakes review of the USMCA trade pact. With Donald Trump threatening new tariffs, many currencies would falter, but investors are betting the peso’s rally has room to run.

The peso has climbed more than 4% in 2024, buoyed by powerful global tailwinds. The currency's strength is fueled by carry trades, where investors borrow in low-interest currencies to invest in Mexico's high-yielding assets. A softer U.S. dollar and soaring commodity prices have provided additional momentum.

Now, traders are increasingly placing their confidence in President Claudia Sheinbaum's ability to navigate the upcoming trade negotiations with the United States and Canada.

The Bull Case: A Path to 15 per Dollar?

Optimism around the peso is backed by some aggressive forecasts. Jason Schenker, president of Prestige Economics and a top-ranked peso forecaster by Bloomberg, believes positive surprises in the trade talks could propel the currency significantly higher.

"Upside surprises in trade talks could push the peso to 16 to the dollar very easily, maybe even a 15 handle in the next 12 to 18 months," Schenker said. The currency currently trades around 17.3.

This confidence reflects a belief in the deepening economic ties between Mexico and the U.S. "It might take a while for everything to be fully hashed out," Schenker noted, but he expects cooperation and economic integration to accelerate over time.

President Sheinbaum has also highlighted the peso's performance as a sign of stability. "The peso wouldn't be where it is if there weren't certainty," she said at a press conference on January 2, referring to the outlook for the economy and its trade relationship with the U.S.

Key Risks: Volatility and Crowded Trades

Not everyone shares this bullish outlook. Analysts at BBVA Mexico caution that the USMCA review will inevitably introduce volatility, which could weigh on the peso.

A more significant concern is speculative positioning. According to a note from strategists led by Ociel Hernandez, bets on the peso have reached their highest level since 2024. This makes the currency highly "vulnerability to any deterioration in sentiment," meaning any negative headlines could trigger a sharp reversal.

While the trade talks may not derail the currency long-term, investors should brace for turbulence as negotiations unfold.

Global Tailwinds Powering the Rally

The peso's strength isn't solely a domestic story. It's part of a broader trend lifting assets across developing nations as the U.S. dollar sinks to a four-year low.

Latin American currencies, in particular, have led gains this year. Ivan Riveros, a strategist at Citigroup, attributes this to a rally in commodities and a "huge wave into carry." This trend is widely expected by major banks to continue into 2026, providing a solid foundation for the peso.

Luis Estrada, a strategist at RBC Capital Markets, predicts the peso could strengthen to 17 per dollar this quarter. He believes that if the dollar continues to weaken, the market will likely look past the immediate risks associated with the USMCA negotiations. For now, the powerful momentum from global macro trends appears to be overriding political uncertainty.

A new trade agreement between India and the European Union will not alter the bloc's controversial carbon border tariff, EU officials have confirmed. The decision leaves the policy in place despite sharp criticism from New Delhi, which has warned the levy could disrupt its steel trade.

The EU's Carbon Border Adjustment Mechanism (CBAM) began its initial phase this month, imposing costs on high-carbon imports like steel and cement. An EU official stated plainly that "nothing will be phased out in terms of CBAM's implementation."

No Special Exemptions for India

During negotiations, India expressed concern that the EU might offer exemptions to other partners, such as the United States under a potential deal with President Donald Trump.

However, Brussels has made it clear that no special treatment is on the table. A second EU official confirmed the bloc declined to change the levy or offer more flexible rules for Indian companies.

Instead of concessions, the EU and India agreed to hold technical discussions about the carbon tariff. The EU also committed to not granting other countries more favorable treatment than India under the scheme. This pledge, however, simply reaffirms existing EU legislation, which already prohibits discriminatory application of the CBAM.

"We have neither the intention, nor even the possibility to start discriminating between countries when we implement the CBAM," one official explained.

Understanding the EU's Carbon Border Levy

The EU designed the CBAM to create a level playing field between imported goods and those produced within the bloc, where local factories must already pay for their CO2 emissions.

The policy has drawn criticism from major trading partners, including South Africa and Brazil. They argue the tariff unfairly penalizes developing economies that lack the resources to meet the EU's environmental standards.

What the Trade Deal Delivers

While the carbon tariff remains unchanged, the new trade agreement does offer some benefits for India. The EU has agreed to provide €500 million in support to help India's transition to a lower-emission economy.

Additionally, India will be able to export 1.6 million metric tons of steel to the EU duty-free, which accounts for roughly half of its annual shipments to the bloc.

Despite these provisions, industry analysts expect the CBAM will likely curb Indian steel exports to Europe over the long term. This could push Indian steel mills to find new buyers in markets across Africa and the Middle East. The carbon levy will be phased in gradually, meaning importers will initially only face costs on a limited portion of their products' emissions.

WTI Crude Oil Navigates Key Technical Levels Amid Supply Uncertainty

Bullish Setup Awaits Catalyst as Dip Buyers Emerge

Kazakhstan Production Resumption Threatens Price Support

Extreme Weather Creates Conflicting Supply Signals

Refinery Disruptions and Stock Drawdowns May Support Prices

Middle East Tensions Provide Underlying Price Support

Technical Analysis Points to Uptrend with Critical 200-Day Level

Daily March Crude Oil Futures

Source: fxempire

Canada is actively working to diversify its energy exports beyond the United States, with India emerging as a primary target for increased sales of oil, gas, and uranium. This strategic shift was highlighted by Canadian Energy Minister Tim Hodgson during a conference in India on Tuesday.

Speaking at the Indian Energy Week conference in Goa, Hodgson described Canada's heavy reliance on the U.S. market as a "strategic blunder," signaling a clear opportunity to strengthen energy ties with India.

A New Focus on the Indian Market

Hodgson reiterated the government's ambition for Canada to become an "energy superpower," stating that this goal requires trading with major global energy consumers like India.

"If Canada wants to be an energy superpower, we need to be trading our energy and natural resources with one of the world's largest energy markets: India," he posted on the social media platform X.

The minister emphasized the significance of his visit, noting it marked Canada's first federal ministerial presence at India Energy Week and the first formal energy dialogue between the two nations in eight years.

He connected these diplomatic efforts to domestic infrastructure development, explaining that new projects at home will enable Canada to sell its products globally and forge "a new path for a stronger, more sovereign Canada."

Building Infrastructure for Global Reach

This pivot toward Asia is part of a broader strategy to establish new export routes. The move signals a clear intent to boost energy exports to Asia from Canada's West Coast, positioning India—a key driver of future global oil and gas demand—as a priority destination.

Hodgson confirmed that infrastructure is being developed to support this strategy. "We're now building pipelines to the West Coast. We have three pipelines built here, looking at building more," he stated at the forum.

This initiative follows a major energy and trade partnership Canada signed with China, reflecting a wider move to diversify its international partners.

What the Canada-India Partnership Entails

Although Canada launched its first LNG export project, LNG Canada, last year, it does not currently export liquefied natural gas to India. However, this is expected to change.

According to a draft joint statement on energy reviewed by Bloomberg News, the two countries are expected to formalize their relationship. The agreement will likely involve a pledge for:

• Increased Canadian exports of crude, LNG, and LPG to India.

• More Indian fuel exports to Canada.

This development marks a significant step in Canada's quest to reduce its dependency on the U.S. market and solidify its position as a global energy supplier.

Source: Bloomberg

Russia's central bank is grappling with conflicting signals on inflation from businesses and consumers ahead of its crucial interest rate decision on February 13. While a rate cut was widely expected this year to stimulate an economy that slowed to 1% growth, fresh price pressures are complicating the outlook.

Business and Household Inflation Expectations Diverge

Two key surveys, one of businesses and one of households, are painting a confusing picture for policymakers. These polls are critical gauges for the central bank as it charts its course on monetary policy.

Business Pessimism Hits a Post-2022 High

A recent poll of Russian businesses reveals that price expectations have surged to their highest level since the early months of the military action in Ukraine in 2022. Companies are now projecting a 2026 inflation rate of 9.3%, more than double the official government forecast of 4% to 5%.

Household Views Remain High but Stable

In contrast, household inflation expectations held steady at 13.7% in January, matching the December figure after rising in the previous two months. However, this highlights a significant gap with official data. The same poll showed that the public's perceived inflation rate is 14.5%, far above the official annual rate of 6.5%. This deep-seated mistrust of official statistics helps explain why Russia's central bank maintains one of the world's highest real interest rates.

The Policy Dilemma: To Cut or to Hold?

The recent spike in prices, driven by a government decision to raise the value-added tax (VAT) to 22% on January 1, has cast doubt on earlier declarations that inflation was defeated. This has left analysts divided on the bank's next move.

Andrei Melaschenko of Renaissance Capital noted that the acceleration in prices through December and early January makes holding the rate steady a more probable outcome. "The option of keeping the rate unchanged [is] more likely at the moment," he said.

This view challenges earlier market consensus. A Reuters poll from December showed analysts anticipated the central bank would lower its key rate from the current 16% to 15% in the first quarter of the year.

Balancing Short-Term Spikes and Long-Term Growth

The central bank has previously signaled that it views the inflation surge from the VAT hike as a one-off event with short-term effects. Officials have also pointed to the positive long-term impact on the government's budget balance.

However, some experts warn against an overly aggressive response. Analysts at BCS brokerage argued that keeping rates high to fight a temporary price shock could backfire. "An excessively strict response to short-term effects... could significantly intensify the slowdown in the economy in the medium term," they stated.

Following the upcoming meeting, the bank's next rate-setting decision is scheduled for March 20.