Here is what you need to know on Thursday, January 13:
The dollar faced heavy selling pressure in the second half of the day on Wednesday after the data published by the US Bureau of Labor Statistics showed that the annual Consumer Price Index (CPI) rose to 7% as expected. After losing more than 0.6%, the US Dollar Index is having a tough time staging a recovery and continues to edge lower below 95.00. Investors await December Producer Price Index (PPI) and the weekly Initial Jobless Claims data from the US. Additionally, the European Central Bank will release its Economic Bulletin in the European session.
US Inflation Quick Analysis: Strong figures on all fronts cement Fed action, dollar set to bounce.
Although the CPI inflation in the US reached its strongest level in nearly four decades, the greenback suffered losses against its rivals. Following FOMC Chairman Jerome Powell's cautious tone with regards to balance sheet runoff, the fact that inflation remained within expectations seems to have hurt the dollar. Meanwhile, the CME Group's FedWatch Tool shows that markets are pricing a 21.2% chance of the Fed leaving its policy rate unchanged in March, compared to 17.9% on Wednesday.
US Consumer Inflation Soars: Federal Reserve March rate hike looms.
EUR/USD rose sharply on Wednesday and broke above 1.1400. The pair was last seen trading at its highest level since mid-November at 1.1450.
GBP/USD closed the previous two trading days in the positive territory and gained more than 100 pips in that period. The pair continues to push higher in the early European session and holds comfortably above 1.3700.
USD/JPY dropped to 114.50 area but the benchmark 10-year US Treasury bond yield is posting modest daily gains around 1.75% on Thursday, limiting the pair's losses for the time being.
After breaking above $1,800 earlier in the week, gold registered impressive gains on Tuesday and continues to edge higher on Wednesday. Early Thursday, XAU/USD is moving sideways above $1,820.
Bitcoin gained more than 2% for the second straight day on Wednesday but seems to have lost its bullish momentum near $44,000. Ethereum extended its rebound on Wednesday and rose 4% before turning quiet around $3,330.
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EUR/USD is retreating toward 1.0700 in the early European session on Wednesday. The pair struggles, as the US Dollar finds its feet in the aftermath of the dovish Fed Chair Powell's comments. Cooling EU inflation keeps the Euro undermined. Eyes turn to US ADP data, Fed Minutes.
GBP/USD flatlines below 1.2700, looks to US data/Fed minutes
GBP/USD is lacking a firm directional bias below 1.2700 on Wednesday, reversing early gains. Traders appear reluctant and prefer to wait on the sidelines ahead of the FOMC minutes while the UK elections on Thursday also keep them on the edge. US ADP data eyed as well.
Gold eyes a range breakout, as Fed Minutes looms
Gold price is trading around a flatline near $2,330 early Wednesday, as traders consider the recent US jobs data and Federal Reserve Chairman Jerome Powell’s speech, bracing for yet another busy US calendar.
Bitcoin struggles around $64,000 level
Bitcoin faces resistance near the $64,000 daily level, leading to a 1.05% decline in trading on Wednesday. Ethereum and Ripple similarly encounter resistance, resulting in 1% and 0.5% declines, respectively.
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