Firmer-than-expected US GDP figures lent support to the US Dollar and further reinforced the already resilient stance of the economy, relegating to a secondary role the impassive ECB event, where C. Lagarde kept the summer rate cut in the pipeline.
Here is what you need to know on Friday, January 26:
The resurgence of buying interest in the greenback sparked a strong rebound in the USD Index (DXY), especially after flash Q4 GDP figures came in above estimates and despite declining US yields across the curve. Looking at Friday’s US docket, the salient event will be the release of inflation figures tracked by the PCE for the month of December, seconded by Personal Income, Personal Spending and Pending Home Sales.
EUR/USD sank to the proximity of the 2024 lows near 1.0820 on the back of usual dollar dynamics and the irresolute message from the ECB at its gathering. Moving forward, GfK will release its Consumer Confidence gauge for the month of. February, which will be the only scheduled release on the old continent, at the end of the week.
The intense bounce in the greenback kept GBP/USD’s price action depressed and forced it to break below the key 1.2700 support. On Friday, Gfk’s Consumer Confidence reading is due across the Channel.
USD/JPY partially faded Wednesday’s marked downtick and gathered decent upside traction well north of 147.00 the figure. The BoJ will publish its Minutes at the end of the week, while the final prints of the Coincident Index and the Leading Economic Index are also on tap.
Another inconclusive session saw AUD/USD maintain its trade around 0.6580, following another fruitless move beyond the 0.6600 barrier on Friday.
Geopolitics, shrinking US oil production, and the larger-than-expected weekly drop in US crude oil inventories, coupled with Chinese stimulus, lifted the barrel of WTI to a new two-month high past the $77.00 mark per barrel.
While Gold prices remained stuck in their current consolidative range, Silver prices rebounded further and clinched their third straight day of gains, this time flirting with the $23.00 mark per ounce.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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