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  • EUR/USD slides as soft inflation in Germany’s six states validates ECB dovish bets

    EUR/USD slides as soft inflation in Germany’s six states validates ECB dovish bets


    • EUR/USD declines to near 1.0370 as inflation in six states of Germany decelerates in January.
    • Donald Trump threatens to impose 100% tariffs on BRICS and 25% on Mexico and Canada.
    • The Fed kept interest rates at their current levels on Wednesday.

    EUR/USD faces selling pressure and declines to near 1.0370 in Friday’s European session. The major currency pair declines as the Euro (EUR) weakens across the board amid a slowdown in inflationary pressures in six German states. Softer-than-expected Consumer Price Index (CPI) data for January boosts confidence that Eurozone price pressures are on track to return sustainably to the European Central Bank’s (ECB) desired rate of 2%, which will support the central bank in easing the monetary policy.

    On Thursday, ECB President Christine Lagarde showed confidence in announcing a victory over inflation this year in the monetary policy statement after the central bank reduced its Deposit Facility Rate by 25 basis points (bps) to 2.75%. In Friday’s European session, ECB policymaker and Estonian Central Bank chief Madis Muller also said that it is realistic for inflation to be near 2% “by the middle of this year”.

    Christine Lagarde’s comments at the press conference indicated that the ECB has kept the door open for further policy easing. Lagarde said that we are still in “restrictive territory” and it is premature to “anticipate at what point where will stop”. She avoided providing a pre-defined interest rate cut path and reiterated that we decide meeting by meeting based on data.

    Going forward, investors will focus on the flash Eurozone Harmonized Index of Consumer Prices (HICP) data for January, which will be released on Monday.

    But before that, the preliminary German HICP data for January will be published at 13:00 GMT. However, the impact is expected to be limited, as the inflation data in six German states have already indicated the current status of price pressures.

    Euro PRICE Today

    The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.

      USD EUR GBP JPY CAD AUD NZD CHF
    USD   0.28% 0.14% 0.25% 0.04% 0.04% -0.08% 0.15%
    EUR -0.28%   -0.14% -0.05% -0.23% -0.23% -0.38% -0.12%
    GBP -0.14% 0.14%   0.10% -0.09% -0.11% -0.24% 0.01%
    JPY -0.25% 0.05% -0.10%   -0.21% -0.21% -0.37% -0.10%
    CAD -0.04% 0.23% 0.09% 0.21%   -0.02% -0.15% 0.10%
    AUD -0.04% 0.23% 0.11% 0.21% 0.02%   -0.14% 0.12%
    NZD 0.08% 0.38% 0.24% 0.37% 0.15% 0.14%   0.26%
    CHF -0.15% 0.12% -0.01% 0.10% -0.10% -0.12% -0.26%  

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

    Daily digest market movers: EUR/USD weakens as Trump’s tariff threats improve USD’s appeal

    • EUR/USD remains under pressure as the broader outlook of the US Dollar (USD) remains firm, with the US Dollar Index (DXY) wobbling around 108.20. The safe-haven appeal of the Greenback strengthens as United States (US) President Donald Trump reiterated his intentions of imposing hefty tariffs on his North American peers and BRICS on Thursday.
    • Donald Trump said on his social media platform, TruthSocial, that he requires a commitment from the BRICS that it will “neither create a new currency nor back any other currency” to replace the US Dollar. Trump threatened that any country tries should “face 100% tariffs”, and expect to say “goodbye to selling into the wonderful US economy.”
    • Market experts believe that Donald Trump is using tariff measures as a tool to fulfill his economic agenda, and the imposition of hefty tariffs will be inflationary for the US economy. Such a scenario would support the Federal Reserve (Fed) in holding its stance of keeping interest rates unchanged in the range of 4.25%-4.50% for longer.
    • On Wednesday, the Fed maintained the status quo and guided to remain in the waiting mode until the central bank sees any “real progress in inflation or some weakness in the labor market”.
    • Meanwhile, the next move in the US Dollar will be guided by the US Personal Consumption Expenditure Price Index (PCE) data for December, which will be published at 13:30 GMT. Economists expect monthly core PCE inflation to have grown at a faster pace of 0.2%, compared to a 0.1% increase in November. Year-on-year, core PCE is estimated to have grown steadily by 2.8%.

    Technical Analysis: EUR/USD returns below 20-day EMA

    EUR/USD declines to near 1.0370 in Friday’s European session, below the 20-day Exponential Moving Average (EMA) around 1.0390. The major currency pair resumed its correction after failing to sustain above the 50-day EMA, which trades around 1.0449 at the press time.

    The 14-day Relative Strength Index (RSI) faces barricades near 60.00. Such a scenario indicates that the recovery move was short-lived.

    Looking down, the January 20 low of 1.0266 and January 13 low of 1.0177 will act as major support for the pair. Conversely, the December 6 high of 1.0630 will be the key barrier for the Euro bulls.

     



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  • Dow Jones trims gains on Friday but still green for the week

    Dow Jones trims gains on Friday but still green for the week


    • The Dow Jones eased somwhat on Friday, testing into 44,300.
    • Despite a quiet end to the week, equities are poised for strong bullish closes.
    • US PMI data came in more mixed than expected, to little effect.

    The Dow Jones Industrial Average (DJIA) churned into a soft backpedal on Friday, testing down around 200 points on a slow trading day. The Dow Jones is capping off an otherwise firmly bullish week, with the index gaining around 2.3% from Monday’s opening bids. The DJIA has gained ground for the second week in a row, firmly hinting that the bull market is back after a six-week backslide.

    President Donald Trump stoked the flames of pro-equity sentiment this week by not instituting the day-one tariffs he promised on the campaign trail. He also announced this week that he would “demand” lower interest rates from the Federal Reserve (Fed) and plans to request a drop in oil prices from Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC).

    The S&P Global Purchasing Managers Index (PMI) survey results for January were even more mixed than analysts anticipated. According to an ambiguous number of survey respondents, businesses saw a better-than-expected improvement in forward-looking expectations for growth in the manufacturing sector. Still, services-based businesses are more despondent about future business conditions than most anticipated.

    January’s Manufacturing sector PMI rose to 50.1 from the previous month’s 49.4, surpassing the forecast of 49.6. The Services PMI for the same period shrank to 52.8 from 56.8, well below the expected 56.5, but still remains in positive territory overall, meaning purchasing managers who bothered to respond to the survey don’t expect much growth in the coming month, but don’t expect an outright contraction in business conditions either.

    Dow Jones news

    Despite some steeper losses in key overweighted stocks dragging the Dow slightly lower on Friday, the index itself is roughly on balance, with about half of the board’s listed equities still finding higher ground to wrap up the trading week. Walt Disney Co (DIS) rallied 1.8% to $113 per share, mainly on the back of expectations that past performance is indicative of future results after the entertainment monolith returned 24% over 2024 to people holding its shares. On the low side, Nvidia (NVDA) fell 2.5%, declining below $144 per share as investors fear the company may be doomed now that its run of seeing 100%-plus growth in annualized revenues may be over.

    Dow Jones price forecast

    The Dow Jones Industrial Average is once again knocking on record highs just above 45,000 set late last November. The DJIA initially declined 7.4% top-to-bottom in a six week backslide after posting the fresh record, but the wheels are back on the road as buyers continue to tilt into risk appetite.

    The Dow Jones has climbed 6.8% from January’s swing low into 41,730, testing the 44,500 region after closing in the green for all but one of the last nine consecutive trading sessions. The immediate barrier to fresh record highs will be 45,000 major handle itself, while a pullback to the 50-day Exponential Moving Average (EMA) near 43,275 could hamper bullish momentum.

    Dow Jones daily chart

    Dow Jones FAQs

    The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.

    Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.

    Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.

    There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.

     



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  • How will the BoJ’s anticipated interest rate hike affect USD/JPY?

    How will the BoJ’s anticipated interest rate hike affect USD/JPY?


    • The Bank of Japan is set to hike interest rates to 0.50% on Friday.
    • All eyes will remain on the language in the policy statement and Governor Ueda’s press conference.
    • The Japanese Yen could witness intense volatility on the BoJ policy announcements.

    The Bank of Japan (BoJ) is widely expected to raise the short-term interest rate from 0.25% to a 17-year high of 0.50% in January, following the conclusion of its two-day monetary policy review on Friday.

    The Japanese Yen (JPY) is set to rock on the BoJ policy announcements as investors seek to find fresh clues on the central bank’s next policy move.  

    What to expect from the BoJ interest rate decision?

    The BoJ will likely begin 2025 with some action as it remains on track to revive its rate-hiking cycle after pausing for three consecutive meetings. In July 2024, the Japanese central bank unexpectedly raised rates by 15 basis points (bps) from 0.1% to 0.25%.

    Markets speculated that a slew of hotter-than-expected inflation readings, the ongoing depreciation of the JPY and a fiscal budget strengthened the case for a BoJ rate hike at the January meeting.  

    Tokyo annual Consumer Price Index (CPI) rose 3% in November, up from 2.6% in October. Core inflation, which excludes food and energy costs, increased by 2.4% in the same period after reporting a 2.2% growth in October. Tokyo’s inflation numbers are widely considered a leading indicator of nationwide trends.

    Meanwhile, Japan’s annual Producer Price Index (PPI) remained at 3.8% in December, driven primarily by high food prices, particularly a 31.8% increase in agricultural goods costs. Separately, the Japanese Cabinet approved a historic budget of $732 billion for the fiscal year beginning in April while restricting new bond issuance to its lowest level in 17 years, per Reuters. 

    The recent hawkish commentary from BoJ Governor Kazuo Ueda and Deputy Governor Ryozo Himino also pointed to a likely rate hike this week. Ueda said on January 16 that the board members “will debate at next week’s meeting whether to hike rates.” In his speech on January 14, Himino noted: “Japan’s inflation expectations have gradually heightened, now around 1.5%. Japan’s economy is roughly moving in line with our scenario projecting underlying inflation, inflation expectations to both move around 2%.”

    With a rate hike almost a given, the language of the policy statement and Governor Ueda’s post-policy meeting press conference, due at 06:30 GMT, will help determine the path of the Bank’s next policy move.

    The BoJ is also set to publish its quarterly Outlook Report and is expected to raise its inflation projections amid the gradual depreciation of the Japanese Yen and a recent surge in the cost of rice, Bloomberg reported, citing people familiar with the matter.  

    Analysts at BBH said: “Two-day Bank of Japan meeting ends Friday with an expected 25 bp hike to 0.5%. Markets have firmed up the odds of a hike over the past week to around 85% after BOJ officials expressed more confidence on wage growth gathering momentum.”

    “In our view, the bar for a hawkish surprise is high because the BoJ will want to avoid unsettling the markets as it did back in July. As such, the Yen is likely to remain under downside pressure as the markets continue to price in the policy rate to peak around 1% over the next two years, the analysts added. “

    How could the Bank of Japan’s interest rate decision affect USD/JPY?

    Reuters reported last week, citing sources familiar with the central bank’s thinking, the BoJ is expected to maintain its hawkish stance while raising rates. The hawkish hike could be influenced by global financial market developments, such as United States (US) President Donald Trump’s return to the White House.

    If the BoJ struggles to provide consistent guidance on the next policy move, reiterating that it will remain data-dependent and make a decision on a meeting-by-meeting basis, the Japanese Yen is likely to resume its downslide against the US Dollar (USD).

    USD/JPY could fall hard if the BoJ hints at a March rate hike while expressing increased concerns over inflation.

    Any knee-jerk reaction to the BoJ policy announcements could be temporary heading into Governor Ueda’s presser. Investors will continue to pay close attention to US President Donald Trump’s tariff talks, which trigger a big market reaction.

    From a technical perspective, Dhwani Mehta, Asian Session Lead Analyst at FXStreet, notes: “USD/JPY remains confined between the 21-day Simple Moving Average (SMA) and the 50-day variant in the run-up to the BoJ showdown. However, the 14-day Relative Strength Index (RSI) sits just above 50, suggesting that the pair could break the consolidative phase to the upside.”

    “A hawkish BoJ hike could revive the USD/JPY correction from six-month highs of 158.88, smashing the pair toward the 200-day SMA at 152.85. The next support is seen at the 100-day SMA of 151.59. Further declines could challenge the 151.00 round level. Alternatively, buyers must yield a sustained break above the 21-day SMA at 157.13 to resume the uptrend toward the multi-month highs of 158.88. Buyers will then target the 160.00 psychological level,” Dhwani adds.

    Economic Indicator

    BoJ Monetary Policy Statement

    At the end of each of its eight policy meetings, the Policy Board of the Bank of Japan (BoJ) releases an official monetary policy statement explaining its policy decision. By communicating the committee’s decision as well as its view on the economic outlook and the fall of the committee’s votes regarding whether interest rates or other policy tools should be adjusted, the statement gives clues as to future changes in monetary policy. The statement may influence the volatility of the Japanese Yen (JPY) and determine a short-term positive or negative trend. A hawkish view is considered bullish for JPY, whereas a dovish view is considered bearish.

    Read more.

    Next release: Fri Jan 24, 2025 03:00

    Frequency: Irregular

    Consensus: –

    Previous: –

    Source: Bank of Japan

    Bank of Japan FAQs

    The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.

    The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.

    The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.

    A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.

     



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  • USD/INR holds steady as Trump threatens China with tariffs

    USD/INR holds steady as Trump threatens China with tariffs


    • The Indian Rupee trades flat in Wednesday’s Asian session.
    • Renewed USD demand and Trump’s tariff announcements might weigh on the INR. 
    • The routine RBI intervention and lower crude oil prices might cap the downside for local currency. 

    The Indian Rupee (INR) flat lines on Wednesday. The persistent US Dollar (USD) buying from foreign portfolio investors and local oil companies could weigh on the lNR. Additionally, US President Donald Trump’s plan to impose tariffs on China might exert some selling pressure on Asian peers, including the Indian Rupee. 

    Nonetheless, the downside for the INR might be limited as the Reserve Bank of India (RBI) could intervene in the foreign exchange market via USD sales to prevent the local currency from significant depreciation. A decline in crude oil prices might also help limit the INR’s losses as India is the world’s third-largest oil consumer. Investors will closely monitor the preliminary reading of HSBC India’s Purchasing Managers Index (PMI) and US S&P PMI data for January, which will be published later on Friday. 

    Indian Rupee looks fragile amid multiple headwinds

    • India’s GDP is estimated to grow at 6.5-6.8% in the current fiscal year, according to Deloitte India on Tuesday.
    • Moody’s lowered India’s economic growth forecast to 7.0% for the fiscal year ending March 2025, down from 8.2% recorded in the previous fiscal year.
    • Overseas investors have sold a net total of about $6.5 billion worth of local equities and bonds in January, the largest monthly outflow since October 2023.
    • Trump stated on Tuesday that his administration is discussing imposing a 10% tariff on goods imported from China on February 1 because fentanyl is being sent from China to Mexico and Canada, per Reuters. 

    USD/INR price action remains constructive in the longer term 

    The Indian Rupee trades on a flat note on the day. The path of least resistance is to the upside as the USD/INR pair has formed higher highs and higher lows while holding above the key 100-day Exponential Moving Average (EMA) on the daily chart. Additionally, the 14-day Relative Strength Index (RSI) is located above the midline near 67.00, indicating bullish momentum in the near term. 

    The all-time high of 86.69 appears to be a tough nut to crack for bulls. A sustained break above the mentioned level could open the door for a rally toward the 87.00 psychological level. 

    On the flip side, a move back below 86.18, the low of January 20, could clear the way for a dip to the next support level at 85.85, the low of January 10. The next downside target to watch is 85.65, the low of January 7. 

    Indian Rupee FAQs

    The Indian Rupee (INR) is one of the most sensitive currencies to external factors. The price of Crude Oil (the country is highly dependent on imported Oil), the value of the US Dollar – most trade is conducted in USD – and the level of foreign investment, are all influential. Direct intervention by the Reserve Bank of India (RBI) in FX markets to keep the exchange rate stable, as well as the level of interest rates set by the RBI, are further major influencing factors on the Rupee.

    The Reserve Bank of India (RBI) actively intervenes in forex markets to maintain a stable exchange rate, to help facilitate trade. In addition, the RBI tries to maintain the inflation rate at its 4% target by adjusting interest rates. Higher interest rates usually strengthen the Rupee. This is due to the role of the ‘carry trade’ in which investors borrow in countries with lower interest rates so as to place their money in countries’ offering relatively higher interest rates and profit from the difference.

    Macroeconomic factors that influence the value of the Rupee include inflation, interest rates, the economic growth rate (GDP), the balance of trade, and inflows from foreign investment. A higher growth rate can lead to more overseas investment, pushing up demand for the Rupee. A less negative balance of trade will eventually lead to a stronger Rupee. Higher interest rates, especially real rates (interest rates less inflation) are also positive for the Rupee. A risk-on environment can lead to greater inflows of Foreign Direct and Indirect Investment (FDI and FII), which also benefit the Rupee.

    Higher inflation, particularly, if it is comparatively higher than India’s peers, is generally negative for the currency as it reflects devaluation through oversupply. Inflation also increases the cost of exports, leading to more Rupees being sold to purchase foreign imports, which is Rupee-negative. At the same time, higher inflation usually leads to the Reserve Bank of India (RBI) raising interest rates and this can be positive for the Rupee, due to increased demand from international investors. The opposite effect is true of lower inflation.

     



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  • Gold prices dip in face of strengthening US Dollar

    Gold prices dip in face of strengthening US Dollar


    • Gold slightly down in late trading, still up 0.40% for the week amid geopolitical tensions.
    • Mixed US economic data; higher Housing Starts, lower Building Permits minimally impact Bullion.
    • Fed Governor Waller’s dovish comments suggest potential for early rate cuts.

    Gold’s price dropped late in the North American session, but it is set to finish the week with gains of over 0.40% as market players await the inauguration of US President-elect Donald Trump. Although the XAU/USD trades at $2,701, down 0.44%, investors continued to buy the golden metal due to political uncertainty.

    The precious metal continues to be driven by geopolitics and politics in the United States (US). Although US Treasury bond yields in the belly of the curve remained unchanged, Bullion buyers failed to push prices higher to book additional gains ahead of the weekend.

    The US economic schedule showed that Housing Starts jumped double digits, though Building Permits contracted in December. Gold barely reacted to the news, as most of the data revealed during the week, led by Retail Sales featured on Thursday, suggest the economy is solid.

    The US Dollar Index (DXY), which tracks the USD’s performance against a basket of six peers, surged 0.35% to 109.34.

    Other data revealed during the Asian session showed that China’s economy hit a 5% Gross Domestic Product (GDP) growth rate in 2024, according to the National Bureau of Statistics.

    On Thursday, Fed Governor Christopher Waller tilted dovish and commented that the US central bank could lower borrowing costs sooner and faster if the disinflation process evolves.

    Market participants are pricing in near-even odds that the Fed will cut rates twice by the end of 2025 and see the first reduction in June.

    Source: Prime Market Terminal

    Next week, the US economic docket will feature the US Presidential Inauguration, the release of Initial Jobless Claims and Flash PMIs data.

    Daily digest market movers: Gold price pressured ahead of the weekend

    • Gold fell as real yields remained firm on Friday. Measured by the 10-year Treasury Inflation-Protected Securities (TIPS) yield, was virtually unchanged at 2.18%.
    • The US 10-year Treasury bond yield was unchanged at 4.618%, a headwind for the golden metal.
    • US Housing Starts jumped from 1.294 million to 1.499 million in December, a jump of 15.8% MoM.
    • Building Permits for the same period shrank as permits dipped from 1.493 million to 1.483 million, a 0.7% drop.
    • The latest inflation data and Fed Waller’s comments pressured the US Dollar, as traders had grown confident the Fed would cut rates sooner rather than later. Waller didn’t rule out a cut in the March meeting as inflation “is getting close to what our 2% inflation target would be.”

    XAU/USD technical outlook: Gold hold firm near $2,700

    Gold prices fell amid the lack of catalysts ahead of the weekend. Nonetheless, buyers must keep XAU/USD’s prices above $2,700, so they can remain hopeful of pushing the yellow metal toward the December 12 high of $2,726. Once surpassed, the next stop would be $2,750, followed by the all-time high at $2,790.

    On the other hand, buyers’ failure to achieve the previously mentioned outcome could mean Gold might test the January 13 swing low of $2,656, followed by the confluence of the 50 and 100-day Simple Moving Averages (SMAs) at $2,639 – $2,642.

    Gold FAQs

    Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

    Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

    Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

    The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.



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  • Australian Dollar holds gains as China GDP rises in previous quarter

    Australian Dollar holds gains as China GDP rises in previous quarter


    • The Australian Dollar appreciates after the release of economic figures from China.
    • China’s GDP grew 5.4% YoY in Q4 of 2024 after reporting a 4.6% expansion in Q3.
    • US Retail Sales increased by 0.4% MoM in December, against the expected 0.6% growth.

    The Australian Dollar (AUD) edges higher against the US Dollar (USD) following the economic data from China released on Friday. China’s economy grew 5.4% over the year in the fourth quarter of 2024 after reporting a 4.6% expansion in the third quarter. Data beat the market consensus of 5% in the reported period, by a wide margin.

    Chinese Gross Domestic Product (GDP) rate rose 1.6% QoQ in Q4 2024, having increased 0.9% in the previous quarter. This figure matched the expectations of 1.6%. The annual December Retail Sales increased by 3.7% vs. the 3.5% expected and 3.0% prior, while Industrial Production arrived at 6.2% vs. the 5.4% forecast and November’s 5.4%.

    The National Bureau of Statistics (NBS) shared its outlook on the economy during a press conference on Friday. The NBS highlighted that economic operations continue to face significant difficulties and challenges. It noted that the impact of changes in the external environment is intensifying, while domestic demand remains insufficient.

    Australia’s seasonally adjusted Unemployment Rate rose to 4.0% in December, compared to 3.9% in November, aligning with market expectations. Employment increased by 56.3K in December, up from 28.2K in November (revised from 35.6K) and significantly exceeding the market forecast of 15.0K.

    Bjorn Jarvis, head of labor statistics at the ABS, highlighted key data points: “The employment-to-population ratio rose 0.1% percentage points to a new record of 64.5%. This was 0.5 percentage points higher than a year ago and 2.3 percentage points above pre-COVID-19 levels. The increase in both employment and unemployment led to a further rise in the participation rate, which reflects the proportion of the population either employed or actively seeking work.”

    Australian Dollar advances as US Dollar remains subdued amid weaker US Retail Sales data

    • The US Dollar Index (DXY), which measures the US Dollar’s performance against six major currencies, trades near 109.00. The Greenback edges lower after the weaker US Retail Sales data.
    • US Retail Sales rose by 0.4% MoM in December, reaching $729.2 billion. This reading was weaker than the market expectations of a 0.6% rise and lower than the previous reading of a 0.8% increase (revised from 0.7%).
    • Chicago Federal Reserve Bank President Austan Goolsbee stated on Thursday that he has grown increasingly confident over the past several months that the job market is stabilizing at a level resembling full employment, rather than deteriorating into something worse, according to Reuters.
    • The US Consumer Price Index increased by 2.9% year-over-year in December, up from 2.7% in November, aligning with market expectations. Monthly, CPI rose 0.4%, following a 0.3% increase in the previous month.
    • US Core CPI, which excludes volatile food and energy prices, rose 3.2% annually in December, slightly below November’s figure and analysts’ forecasts of 3.3%. Monthly, core CPI edged up 0.2% in December 2024.
    • US Producer Price Index for final demand rose 0.2% MoM in December after an unrevised 0.4% advance in November, softer than the 0.3% expected. The PPI climbed 3.3% YoY in December, the most since February 2023, after increasing 3.0% in November. This reading came in below the consensus of 3.4%.
    • On Wednesday, Scott Bessent, Donald Trump’s nominee for Treasury Secretary, emphasized the importance of maintaining the US Dollar as the world’s reserve currency for the nation’s economic stability and future prosperity. Bessent stated “Productive investment that grows the economy must be prioritized over wasteful spending that drives inflation,” per Bloomberg.
    • The Federal Reserve reported in its latest Beige Book survey, released on Wednesday, that economic activity saw slight to moderate growth across the twelve Federal Reserve Districts in late November and December. Consumer spending increased moderately, driven by strong holiday sales that surpassed expectations. However, manufacturing activity experienced a slight decline overall, as some manufacturers stockpiled inventories in anticipation of higher tariffs.

    Technical Analysis: Australian Dollar remains above 0.6200 support near 14-day EMA

    The AUD/USD pair trades near 0.6220 on Friday, attempting to break above the descending channel on the daily chart. A successful breakout would weaken the prevailing bearish bias. The 14-day Relative Strength Index (RSI) also trends upward toward the 50 level, signaling potential recovery momentum.

    The AUD/USD pair encounters immediate resistance at the upper boundary of the descending channel, approximately at 0.6220.

    On the downside, initial support is seen at the 14-day Exponential Moving Average (EMA) at 0.6213, followed by the nine-day EMA at 0.6206. A more substantial support level is located near the lower boundary of the descending channel, around the 0.5920 mark.

    AUD/USD: Daily Chart

    Australian Dollar PRICE Today

    The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen.

      USD EUR GBP JPY CAD AUD NZD CHF
    USD   -0.05% -0.05% 0.12% 0.01% -0.03% -0.07% -0.04%
    EUR 0.05%   -0.01% 0.19% 0.06% 0.01% -0.02% 0.00%
    GBP 0.05% 0.01%   0.17% 0.07% 0.03% -0.01% 0.01%
    JPY -0.12% -0.19% -0.17%   -0.10% -0.16% -0.21% -0.18%
    CAD -0.01% -0.06% -0.07% 0.10%   -0.05% -0.08% -0.06%
    AUD 0.03% -0.01% -0.03% 0.16% 0.05%   -0.04% -0.02%
    NZD 0.07% 0.02% 0.01% 0.21% 0.08% 0.04%   0.03%
    CHF 0.04% -0.00% -0.01% 0.18% 0.06% 0.02% -0.03%  

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

    Economic Indicator

    Gross Domestic Product (YoY)

    The Gross Domestic Product (GDP), released by the National Bureau of Statistics of China on a monthly basis, is a measure of the total value of all goods and services produced in China during a given period. The GDP is considered as the main measure of China’s economic activity. The YoY reading compares economic activity in the reference quarter compared with the same quarter a year earlier. Generally speaking, a rise in this indicator is bullish for the Renminbi (CNY), while a low reading is seen as bearish.

    Read more.

    Last release: Fri Jan 17, 2025 02:00

    Frequency: Quarterly

    Actual: 5.4%

    Consensus: 5%

    Previous: 4.6%

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  • Pound Sterling slides as UK economy barely grow in November

    Pound Sterling slides as UK economy barely grow in November


    • The Pound Sterling drops as the UK GDP rose at a slower-than-expected pace, and factory activity contracted in November.
    • Traders have raised BoE dovish bets for February’s policy meeting.
    • Investors await the US weekly jobless claims and Retail Sales data for December on Thursday.

    The Pound Sterling faces selling pressure in Thursday’s North American session after the release of the United Kingdom’s (UK) monthly Gross Domestic Product (GDP) and factory data for November. The Office for National Statistics (ONS) reported that the economy returned to growth after contracting in October. However, the growth rate was slower than projected. The economy rose by 0.1% after declining at a similar pace in October. Economists expected the economy to have expanded by 0.2%.

    Both Manufacturing and Industrial Production data contracted in November on a monthly as well as annual basis. Month-on-month, Industrial and Manufacturing Production contracted by 0.4% and 0.3%, respectively. The pace of decline was slower than that seen in October. Economists expected Industrial Production to have grown by 0.1%, while Manufacturing Production was estimated to have remained flat.

    Signs of continuous weakness in the UK factory activity suggest that producers are not fully utilizing their operating capacity on the assumption that the already weak demand environment will worsen further after United States (US) President-elect Donald Trump slaps hefty import tariffs globally once he takes office.

    However, growing expectations that the Bank of England’s (BoE) monetary policy easing will be less gradual this year would offer some relief for factory owners. Traders have raised BoE dovish bets after the release of the UK Consumer Price Index (CPI) data for December on Wednesday, which showed signs of cooling price pressures.

    Traders see a roughly 84% chance that the BoE will reduce interest rates by 25 basis points (bps) to 4.5% at its policy meeting in February. For the entire year, economists expect four interest rate cuts, according to a Reuters poll.

    Cooling price pressures have offered some relief to Chancellor of the Exchequer Rachel Reeves as they led to a pause in the rally in yields on UK gilts. 30-year UK gilt yields have corrected to 5.28% from their more-than-26-year high of 5.47%. The British currency has faced a significant decline in the last few trading days as soaring UK gilt yields due to uncertainty over the economic outlook.

    British Pound PRICE Today

    The table below shows the percentage change of the British Pound (GBP) against listed major currencies today. The British Pound was the strongest against the Canadian Dollar.

      GBP EUR USD JPY CAD AUD NZD CHF
    GBP   -0.28% -0.29% -0.68% 0.00% -0.10% -0.07% -0.48%
    EUR 0.28%   -0.01% -0.40% 0.30% 0.19% 0.22% -0.20%
    USD 0.29% 0.00%   -0.41% 0.30% 0.19% 0.22% -0.20%
    JPY 0.68% 0.40% 0.41%   0.71% 0.58% 0.57% 0.20%
    CAD -0.01% -0.30% -0.30% -0.71%   -0.10% -0.08% -0.49%
    AUD 0.10% -0.19% -0.19% -0.58% 0.10%   0.03% -0.39%
    NZD 0.07% -0.22% -0.22% -0.57% 0.08% -0.03%   -0.41%
    CHF 0.48% 0.20% 0.20% -0.20% 0.49% 0.39% 0.41%  

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

    Daily digest market movers: Pound Sterling weakens against USD 

    • The Pound Sterling remains under pressure slightly below 1.2200 against the US Dollar (USD) in North American trading hours. The GBP/USD pair falls due to weak UK data. While, the US Dollar trades higher, with the US Dollar Index (DXY) wobbling around 109.30, but is likely to face selling pressure as the US Initial Jobless Claims data for the week ending January 10 remains higher-than-expected and the Retail Sales data rose moderately in December.
    • The US Department of Labor reported individuals claiming jobless benefits for the first time were 217K, higher than estimates of 210K and the prior release of 203K. Month-on-month Retail Sales data, a key measure of consumer spending, rose by 0.4%, slower than estimates of 0.6% and the former release of 0.8%. However, the Retail Sales rose at a faster pace of 3.9% than the prior reading of 3.8%.
    • Going forward, the US Dollar will be influenced by market expectations for the Federal Reserve’s (Fed) likely interest rate action for the entire year.
    • Market participants expect the Fed’s policy-easing path to be less gradual than anticipated earlier. Expectations for the Fed policy outlook were impacted after the release of the United States (US) inflation data for December on Wednesday, which showed that the progress in the disinflation trend has not stalled yet.
    • According to the CME FedWatch tool, traders expect the Fed to deliver more than one interest rate cut this year and anticipate the first reduction in June. Before December’s inflation data, traders were anticipating only one interest rate reduction in September.

    Technical Analysis: Pound Sterling stays below 1.2200

    The Pound Sterling trades near the key level of 1.2200 against the US Dollar on Thursday. The outlook for the Cable remains weak as the vertically declining 20-day Exponential Moving Average (EMA) near 1.2394 suggests that the near-term trend is extremely bearish.

    The 14-day Relative Strength Index (RSI) rebounds slightly after diving below 30.00 as the momentum oscillator turned oversold. However, the broader scenario remains bearish until it recovers inside the 20.00-40.00 range.

    Looking down, the pair is expected to find support near the October 2023 low of 1.2050. On the upside, the 20-day EMA will act as key resistance.

    Economic Indicator

    Consumer Price Index ex Food & Energy (YoY)

    Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is seen as bearish.

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  • Japanese Yen surrenders major part of intraday gains to multi-week top against USD

    Japanese Yen surrenders major part of intraday gains to multi-week top against USD


    • The Japanese Yen gains positive traction for the second straight day amid BoJ rate hike bets. 
    • The narrowing of the US-Japan yield differential provides an additional boost to the JPY. 
    • The risk-on mood caps the JPY and helps USD/JPY to rebound from a multi-week low. 
    • A modest USD uptick contributes to the pair’s bounce, though the upside seems limited.

    The Japanese Yen (JPY) trims a part of strong intraday gains against its American counterpart, lifting the USD/JPY pair back above the 156.00 mark heading into the European session on Thursday. Expectations that the Federal Reserve (Fed) could cut interest rates twice this year, along with easing fears about US President-elect Donald Trump’s disruptive trade tariffs, remain supportive of the risk-on mood. This turns out to be a key factor that undermines the safe-haven JPY and assists the currency pair in finding decent support ahead of the 155.00 psychological mark. 

    Apart from this, the emergence of some US Dollar (USD) dip-buying, bolstered by the growing acceptance that the Fed will pause its rate-cutting cycle later this month, offers support to the USD/JPY pair. That said, any meaningful JPY depreciation seems elusive amid bets for a Bank of Japan (BoJ) rate hike next week. The expectations push the yields on Japanese Government Bonds (JGBs) to multi-year highs. In contrast, the US Treasury bond yields retreated after benign US inflation data, narrowing the US-Japan yield-differential, which could further lend support to the JPY. 

    Japanese Yen trims a part of strong intraday gains amid the risk-on mood

    • Bank of Japan Governor Kazuo Ueda reiterated that the central bank will debate whether to hike rates next week and will raise policy rate this year if economic, price conditions continue to improve. 
    • Ueda’s remarks echoed Deputy Governor Ryozo Himino’s comments earlier this and lift bets for an interest rate hike at the end of the January 23-24 meeting, providing a strong boost to the Japanese Yen. 
    • The yield on the benchmark 10-year Japanese government bond advanced to its highest level since 2011 amid the prospects for further monetary policy tightening by the BoJ. 
    • In contrast, the US Treasury bond yields fell on Wednesday following the release of the US Consumer Price Index (CPI), which eased fears that inflation was accelerating.
    • The US Bureau of Labor Statistics (BLS) reported that the headline CPI rose 0.4% in December and the yearly rate accelerated to 2.9% from 2.7% in the previous month. 
    • The core gauge, which excludes volatile food and energy prices, rose 3.2% on a yearly basis as compared to the 3.3% increase recorded in November and expectations. 
    • The US Dollar dived to a one-week low following the release of the latest US consumer inflation figures and contributed to the USD/JPY pair’s decline on Wednesday. 
    • Richmond Fed President Tom Barkin said that fresh inflation data show progress on lowering inflation to the central bank’s 2% goal, but added that rates should remain restrictive.
    • Against the backdrop of easing fears about US President-elect Donald Trump’s disruptive trade tariffs, softer US inflation data remains supportive of the upbeat market mood.
    • Traders look to the US macro data for a fresh impetus later during the North American session, though the focus will remain glued to the upcoming BoJ policy meeting.

    USD/JPY recovery is likely to face stiff resistance near the 156.35-156.40 area

    Any further slide is likely to find some support near the 155.00 psychological mark, below which the USD/JPY pair could slide to the 154.55-154.50 region. The latter represents the lower boundary of a four-month-old upward-sloping channel and should act as a key pivotal point. A convincing break below will be seen as a fresh trigger for bearish traders and pave the way for an extension of the recent retracement slide from a multi-month peak touched last Friday. Spot prices might then weaken further below the 154.00 mark and test the next relevant support near the 153.40-153.35 horizontal zone. 

    On the flip side, any attempted recovery might now confront resistance near the 156.00 mark ahead of the 156.35-156.45 region and the 156.75 area. Some follow-through buying, leading to a subsequent strength beyond the 157.00 mark, might shift the bias back in favor of bullish traders and lift the USD/JPY pair to the 155.55-155.60 intermediate hurdle en route to the 158.00 round figure. The momentum could extend further towards challenging the multi-month peak, around the 158.85-158.90 region.

    Fed FAQs

    Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

    The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

    In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

    Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.

     



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  • Dow Jones climbs despite tech sellof

    Dow Jones climbs despite tech sellof


    • The Dow Jones is looking to pare recent losses, but topside momentum remains limited.
    • Investors are pivoting out of popular tech rally favorites, dragging equity markets lower.
    • The Dow is keeping on balance as investors rotate into non-tech darlings.

    The Dow Jones Industrial Average (DJIA) skirted Monday’s broad-market declines as investors gave a second thought to their bullish outlook on the long-run tech sector rally. The Dow gained roughly 300 points to kick off the trading week, while the other major equity indexes shed weight.

    Investor hopes for continued rate cuts from the Federal Reserve (Fed) have been swirling the drain since the start of the new trading year and last Friday’s bumper Nonfarm Payrolls (NFP) sealed the deal on the Fed being in no rush to deliver more rate reductions. With a bumping US workforce and inflation pressures continuing to simmer in the background, there is little reason for the Fed to race into further moves on rates. To their credit, Fed policymakers have been warning markets for over a year that neutral rates have definitely moved higher since the pandemic and near-zero rate days of the early 2010s, and now it looks like that fact is finally taking hold in investors’ minds.

    A fresh batch of US inflation figures are due this week: US Producer Price Index (PPI) inflation is due on Tuesday and the Consumer Price Index (CPI) is slated for Wednesday. Both figures are expected to tick upwards in the near term, which could further undermine rate cut hopes. Retail Sales figures for December will land on Thursday, and the figure is expected to shift lower but remain in healthy consumer spending territory.

    Dow Jones news

    Despite a broad-market pullback out of tech stock, over half of the Dow Jones is testing into the high side on Monday, with gains being led by a fresh bout of bidding in UnitedHealth Group (UNH), which is recovering from a December bear run that dragged the health sector stock down from record highs above $600. UNH is up over 4% at the time of writing, breaking above $543 per share.

    On the low side, Nvidia (NVDA) just can’t catch a break, declining another 2.3% and trading south of $133 per share. Forecasters of tech sector stocks, which are hinged entirely around the AI tech craze, have decided that Nvidia will miss out on future earnings in the AI space as competitors sweep in and take market share from the chipmaker. The fact that the AI tech space is entirely dependent on a massive pipeline of investment funds with little to no revenue to speak of is only a minor factor as traders focus on companies situated to service the exorbitant spending habits of large-scale data modelers driving the AI space.

    Dow Jones price forecast

    The Dow Jones is catching a thin bid on Monday, pushing back upwards after a decline into the 42,000 handle. The major equity index has drifted nearly 7.5% top-to-bottom into the bearish side after tapping record peaks just above 45,000.

    Despite recent bear moves, the Dow Jones is still holding north of the 200-day Exponential Moving Average (EMA), but only just. The Dow is due for a bit of a breather after outpacing the long-run moving average since November of 2023 and closing in the green for ten of the last thirteen straight months.

    Dow Jones daily chart

    Economic Indicator

    Producer Price Index (YoY)

    The Producer Price Index released by the Bureau of Labor statistics, Department of Labor measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).

    Read more.



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  • Gold soars unfazed by strong US jobs data ahead of CPI

    Gold soars unfazed by strong US jobs data ahead of CPI


    • Gold rebounds 0.69% despite significant US job additions, challenging Fed’s rate cut path.
    • Gold recovers from post-labor report drop as investors weigh Fed’s cautious disinflation stance.
    • Upcoming US inflation and retail sales data set to influence gold’s trajectory, Fed policy.

    Gold price rebounded off daily lows on Friday, extending its rally for the fourth consecutive day as traders shrugged off a strong United States (US) Nonfarm Payrolls report. This tempered the Federal Reserve’s (Fed) concerns about the labor market, but not so much inflation as some officials acknowledged. The XAU/USD trades at $2,687, up 0.69%.

    Bullion fell sharply after the US Bureau of Labor Statistics (BLS) revealed that the economy added an outstanding number of people to the workforce, topping 200K. As a consequence, the Unemployment Rate dipped, while investors priced in fewer interest rate cuts based on the fact that the economy continues to create enough jobs, while the disinflation process “halted,” according to the Fed’s latest minutes.

    Nevertheless, XAU/USD recovered once market participants digested the data. The data reassured Fed officials that the labor market remains healthy while they tackle inflation, which recently edged higher after the US central bank lowered rates by 100 basis points in 2024.

    The US Dollar rose sharply to multi-month highs according to the US Dollar Index (DXY). The DXY hit 109.96 before trimming gains and is at 109.68, up 0.49%. US Treasury bond yields soared, yet had stabilized, particularly the belly of the curve.

    Chicago Fed President Austan Goolsbee said they don’t complain because the economy has created over 250K jobs. He added that the jobs market seems stable “at full employment,” adding that if conditions are stable and there’s no rise in inflation, “rates should go down.”

    Given the backdrop, investor focus will shift to next week’s data. The US schedule will feature inflation figures on the producer and consumer side, alongside Retail Sales and jobless claims for the week ending January 11.

    Daily digest market movers: Gold price surges accompanied by the US Dollar

    • Gold price shrugs off higher US real yields, which rose by two bps to 2.30%. At the same time, the US 10-year T-note yield soared seven and a half bps to 4.767%.
    • The US Bureau of Labor Statistics (BLS) revealed that the economy created 256K jobs last month, although November was revised downward from 227K to 212K. The consensus projected 160K people to be added to the workforce, with private hiring totaling 223K.
    • The Unemployment Rate fell to 4.1%, while Average Hourly Earnings (AHE) dipped from 4% to 3.9%. Following the data release, traders expect the Federal Reserve to cut rates just once in 2025.
    • Easing expectations of the Federal Reserve continued to edge lower. The December Fed funds futures contract is pricing in 30 basis points of easing.
    • US Consumer Sentiment in January announced by the University of Michigan (UoM) missed estimates of 73.8 and was down to 73.2. Inflation expectations for one year rose by 3.3% up from 2.8% and for a five-year period increased from 3% to 3.3%.
    • On Thursday, Fed Governor Michelle Bowman maintained a hawkish stance, saying the central bank should be cautious in adjusting interest rates, while Kansas City Fed Jeffrey Schmid added that rates are “near” neutral.
    • Earlier, Philadelphia Fed Patrick Harker revealed that the US central bank could pause amid uncertainty, while Boston Fed Susan Collins said the current outlook suggests a gradual approach to rate cuts.

    XAU/USD technical outlook: Gold price soars above $2,650 as bulls stepped in

    Gold’s uptrend remains in place as the yellow metal has carved successive series of higher highs and higher lows, with traders eyeing the $2,700 mark. Momentum is strongly tilted to the upside as seen on the Relative Strength Index (RSI) indicator, which shows bulls are in charge.

    If XAU/USD clears $2,700, the next resistance would be the December 12 high of $2,726 and the all-time high (ATH) at $2,790.

    Conversely, a drop below $2,650 will put into play a challenge of the 50 and 100-day Simple Moving Averages (SMAs) at $2,645 and $2,632 respectively. On further weakness, $2,600 is up next, ahead of the 200-day SMA at $2,503.

    Gold FAQs

    Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

    Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

    Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

    The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

     



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  • Australian Dollar holds steady as US Dollar remains firm ahead of FOMC Minutes


    • The Australian Dollar depreciated as Australia’s trimmed mean fell to an annual 3.2% from 3.5%.
    • Australia’s monthly Consumer Price Index increased by 2.3% YoY in November, the highest level recorded since August.
    • The US Dollar appreciated as the 10-year yield on US Treasury bonds rose by over 1% on Tuesday.

    The Australian Dollar (AUD) faced challenges for the second consecutive session against the US Dollar (USD), with the AUD/USD pair holding losses despite stronger-than-expected monthly inflation data released on Wednesday. Traders are now focused on the upcoming FOMC Minutes, scheduled for release later in the day, as well as the US jobs data, including the Nonfarm Payroll (NFP) report on Friday, for additional insights into policy direction.

    However, the trimmed mean, a closely watched measure of core inflation, fell to an annual 3.2% from 3.5%, edging closer to the Reserve Bank of Australia’s (RBA) target band of 2% to 3%. Traders are currently pricing in a 55% probability that the RBA will lower its cash rate by 25 basis points to 4.35% in February, with a full quarter-point cut expected by April.

    Australia’s monthly Consumer Price Index (CPI) rose 2.3% year-over-year in November, surpassing the market forecast of 2.2% and marking an increase from the 2.1% rise seen in the previous two months. This is the highest reading since August. However, the figure remains within the RBA’s target range of 2–3% for the fourth consecutive month, aided by the ongoing impact of the Energy Bill Relief Fund rebate.

    The Australian Bureau of Statistics reported on Tuesday that permits for new construction projects in Australia dropped by 3.6% month-on-month to 14,998 units in November 2024, falling short of market expectations for a 1.0% decline. This downturn followed an upwardly revised 5.2% increase in October, marking the first decrease in three months.

    The People’s Bank of China (PBoC) is collaborating with the State Planner to bolster the country’s economy. PBoC official Peng Lifeng announced that the central bank will assist banks in expanding loans under the trade-in initiative.

    Australian Dollar declines due to hawkish shift in Fed’s rate trajectory

    • The US Dollar Index (DXY), which measures the US Dollar’s (USD) performance against six major currencies, holds its position above 108.50 at the time of writing.
    • The US Dollar strengthened as the 10-year yield on US Treasury bonds rose by over 1% in the previous session, currently standing at 4.67%. This spike is a stark reminder of the shifting investor sentiment regarding the Federal Reserve’s interest rate trajectory.
    • The US ISM Services PMI increased to 54.1 in November, up from 52.1, exceeding the market expectation of 53.3. The Prices Paid Index, which reflects inflation, rose significantly to 64.4 from 58.2, while the Employment Index dipped slightly to 51.4 from 51.5.
    • The US ISM Manufacturing PMI improved to 49.3 in December, from 48.4 in November. This reading came in better than the market expectation of 48.4.
    • According to Bloomberg, Federal Reserve Bank of Atlanta President Raphael Bostic stated on Tuesday that Fed officials should exercise caution with policy decisions due to uneven progress in reducing inflation. Bostic emphasized the need to lean toward keeping interest rates elevated to ensure the achievement of price stability goals.
    • Richmond Fed President Thomas Barkin highlighted on Friday that the benchmark policy rate should remain restrictive until there is greater confidence that inflation will return to the 2% target.
    • Fed Governor Adriana Kugler and San Francisco Fed President Mary Daly underscored the challenging balancing act facing US central bankers as they aim to slow the pace of monetary easing this year.
    • Traders are cautious regarding President-elect Trump’s economic policies, fearing that tariffs could increase the cost of living. These concerns were compounded by the Federal Open Market Committee’s (FOMC) recent projections, which indicated fewer rate cuts in 2025, reflecting caution amid persistent inflationary pressures.

    Technical Analysis: Australian Dollar moves below nine-day EMA toward 0.6200

    AUD/USD trades near 0.6210 on Wednesday, maintaining its bearish outlook as it remains confined within a descending channel on the daily chart. The 14-day Relative Strength Index (RSI) retreats toward the 30 level, signaling a potential intensification of bearish momentum.

    On the downside, the AUD/USD pair may navigate the region around the lower boundary of the descending channel, at the 0.5990 level.

    The AUD/USD pair may test the immediate resistance around the nine-day Exponential Moving Average (EMA) at 0.6224, followed by the 14-day EMA at 0.6239. A further barrier appears around the upper boundary of the descending channel, at 0.6270 level.

    AUD/USD: Daily Chart

    Australian Dollar PRICE Today

    The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen.

      USD EUR GBP JPY CAD AUD NZD CHF
    USD   -0.06% -0.02% 0.22% -0.06% 0.00% 0.03% -0.00%
    EUR 0.06%   0.04% 0.26% -0.01% 0.06% 0.09% 0.05%
    GBP 0.02% -0.04%   0.26% -0.05% 0.02% 0.05% 0.01%
    JPY -0.22% -0.26% -0.26%   -0.28% -0.21% -0.19% -0.22%
    CAD 0.06% 0.00% 0.05% 0.28%   0.07% 0.10% 0.06%
    AUD -0.01% -0.06% -0.02% 0.21% -0.07%   0.03% -0.01%
    NZD -0.03% -0.09% -0.05% 0.19% -0.10% -0.03%   -0.04%
    CHF 0.00% -0.05% -0.01% 0.22% -0.06% 0.00% 0.04%  

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

    Economic Indicator

    FOMC Minutes

    FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.

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    Next release: Wed Jan 08, 2025 19:00

    Frequency: Irregular

    Consensus: –

    Previous: –

    Source: Federal Reserve

     



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  • Gold surge stalls after JOLTs data, FOMC minutes awaited


    • Gold climbs to $2,664 but faces pressure from a strong US labor market and Trump’s assertive tariff plans.
    • Trump’s unexpected remarks on reclaiming the Panama Canal and imposing tariffs on neighbors bolster the US Dollar.
    • People’s Bank of China boosts gold reserves, signaling increased demand as global economic uncertainties persist.

    Gold price advanced late in the North American session on Tuesday yet retreated from daily highs on solid United States (US) economic data and US President-elect Donald Trump’s press conference remarks. The XAU/USD trades at $2,648, gains 0.50%.

    In the United States, the schedule revealed a strong jobs report amid an increase in job openings, reassuring investors that the labor market is solid. Furthermore, business activity in the services sector improved sharply, weighing on expectations for further easing by the Federal Reserve (Fed).

    In the meantime, US President-elect Donald Trump crossed the wires, said he would like to take back control of the Panama Canal and reiterated that he would impose tariffs on Canada and Mexico. This boosted the US Dollar (USD) and capped Gold’s advance.

    Earlier, Bullion rose to a two-day peak of $2,664 after China’s central bank increased its Gold reserves for the second straight month by 300K ounces to 73.3 million, an indication that the People’s Bank of China (PBoC) resumed its purchases after a six-month pause.

    US Treasury bond yields remained high, bolstering the Greenback. According to the Fed funds futures interest rate contract at the Chicago Board of Trade (CBOT), investors estimate 51 basis points (bps) of easing or two 25 bps interest rate cuts by the Fed toward the end of the year.

    Ahead this week, the US economic docket will feature the ADP Employment Change, Initial Jobless Claims figures, the Fed’s last meeting minutes and December’s US Nonfarm Payrolls report.

    Daily digest market movers: Gold price climbs amid high US yields, underpinned by PBoC purchases

    • Gold remains pressured as US real yields rise two bps up to 2.28%.
    • The US 10-year T-note yield soars six and a half bps to 4.691%.
    • The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, edges up by 0.26% at 108.55 after bouncing from a weekly low of 107.75.
    • The ISM Services PMI in December increased by 54.1, exceeding forecasts of 53.3 and November’s 52.1 reading.
    • The Job Labor and Turnover Survey (JOLTS) revealed that work openings increased from 7.839 million to 8.098 million in November.
    • The US trade deficit widened in November, according to the US BEA, reaching $78.2 billion compared to $73.6 billion in October.
    • Imports climbed by 3.4% MoM to $351.6 billion from $339.9 billion, while exports increased by 2.7%MoM to $273.4 billion from $266.3 billion.

    XAU/USD technical outlook: Gold price advances but remains below $2,650

    Gold prices have advanced above $2,640, opening the door to exchange hands at around the $2,640 – $2,650 range. Nonetheless, the yellow metal cannot decisively clear the 50-day Simple Moving Average (SMA) at around $2,651, which could pave the way for further upside.

    In that outcome, the next ceiling level would be $2,700 ahead of challenging the December 12 peak at $2,726. If surpassed, the next stop would be the record high at $2,790.

    Conversely, if sellers drag the XAU/USD below the 100-day SMA of $2,627, look for a test of $2,500 before Gold extends its losses to the 200-day SMA at $2,494.

    Gold FAQs

    Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

    Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

    Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

    The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

     



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