US and UK Inflation in Focus Today
Today’s market action is driven by inflation data from the UK and US, alongside speeches from key central bank officials in Europe and the US. Mixed energy prices and steady movements in currency pairs are setting the tone as traders digest inflation readings and their implications for monetary policy.
Key Data Out Today
- UK CPI (Dec): Inflation slightly slowed with MoM at 0.3% and YoY at 2.5%, both under expectations.
- US CPI (Dec): Headline CPI YoY expected at 2.9%, while previously at 2.7%, ex-Food and Energy CPI is expected to rise to 0.2%.
- GBP Retail Price Index (Dec): MoM at 0.3% (vs. 0.7% expected), YoY at 3.5% (vs. 3.8% forecast).
- NY Empire State Manufacturing Index (Jan): Due later, with forecasts pointing to slight expansion.
Commodities
- Crude Oil: WTI climbed 0.68% to $78.03, while Brent gained 0.54% to $80.35, supported by ongoing supply concerns.
- Natural Gas: Slight rise of 0.28% to $3.98/MMBtu, driven by cooler weather and increased demand.
- Gold & Silver: Gold up 0.27% to $2682.66, benefiting from a weaker USD. Silver gained 0.36% to $29.95..
Currency Movements
EUR/USD
- EUR/USD: The euro is trading at 1.0294 against the U.S. dollar, showing a slight decrease of 0.13% from the previous day. This movement reflects ongoing concerns about the Eurozone’s economic growth and the European Central Bank’s monetary policy stance.
GBP/USD
- GBP/USD: The British pound stands at 1.2199, down 0.13% day-over-day. The pound’s depreciation is influenced by the UK’s economic challenges and market expectations regarding the Bank of England’s future interest rate decisions.
AUD/USD
- AUD/USD: The Australian dollar is relatively stable at 0.6195, with a marginal increase of 0.01%. This stability is attributed to steady commodity prices and Australia’s economic outlook.
NZD/USD
- NZD/USD: The New Zealand dollar has risen to 0.5606, marking a 0.26% increase. Positive economic indicators from New Zealand are contributing to this appreciation.
USD/JPY
- USD/JPY: The U.S. dollar has declined by 0.50% against the Japanese yen, bringing the pair to 157.17. This movement is influenced by shifts in U.S. Treasury yields and market sentiment towards safe-haven assets.
USD/CNY
- USD/CNY: The dollar is trading at 7.3472 against the Chinese yuan, showing a modest increase of 0.05%. This reflects China’s recent trade balance data and the People’s Bank of China’s monetary policy actions.
USD/CHF
- USD/CHF: The U.S. dollar is slightly down by 0.06% against the Swiss franc, trading at 0.9120. This pair’s movement often mirrors global risk sentiment and economic data releases.
USD/CAD
- USD/CAD: The dollar stands at 1.4354 against the Canadian dollar, with a minor increase of 0.03%. Fluctuations in oil prices, a significant export for Canada, continue to impact this currency pair.
USD/MXN
- USD/MXN: The U.S. dollar has risen by 0.14% against the Mexican peso, reaching 20.5429. This change is influenced by recent economic data from Mexico and broader market risk appetite.
USD/INR
- USD/INR: The dollar is trading at 86.4980 against the Indian rupee, showing a slight decrease of 0.04%. India’s economic indicators and the Reserve Bank of India’s policy decisions play a role in this pair’s dynamics.
Market Outlook
- Central bank rhetoric today will provide additional clarity on the inflation outlook and its influence on rate paths. Key speeches from ECB’s Lane and De Guindos, alongside multiple Fed members, could shift market sentiment.
- US CPI reinforces expectations for a cautious approach from the Fed, supporting safe-haven assets like gold.
- Oil markets remain focused on OPEC+ production strategies and geopolitical factors, with potential for further gains if global growth stabilizes.