KEY RELEASES
United States of America
USD is significantly strengthening against its main competitors – EUR, JPY, and GBP.
In the absence of significant economic releases, the US currency continues to strengthen its position against alternative assets against the background of changing market sentiment: previously, most investors were confident that this year the US Federal Reserve would definitely start lowering interest rates and reduce them at least three times, however, recent economic data and comments from officials question this option. In December, employment in the United States shaply increased by 216.0 thousand, significantly exceeding expectations, and unemployment remained at 3.7% instead of the projected growth to 3.8%, but the rate of inflation accelerated from 3.1% to 3.4%. In this situation, representatives of the regulator began to think about postponing the transition to "dovish" rhetoric from March to the end of the year. Today, during the day, investors are waiting for the speech of the US Federal Reserve Governor Christopher Waller to the Brookings Institution with comments on further economic prospects. They may contain an assessment of the state of the US economy, as well as hints at the timing of the start of a reduction in the cost of borrowing.
Eurozone
EUR is moderately strengthening against GBP and JPY but is weakening against USD.
Investors remained focused on the comments of leading officials of the European Central Bank (ECB) made at the Economic Forum in Davos. Yesterday, the Austrian central bank chief Robert Holzmann said that the regulator may abandon the correction of monetary policy in 2024. This position was supported by Bundesbank President Joachim Nagel and Bank of France Governor Francois Villeroy de Galhau, who noted that it is too early for the ECB to discuss lowering interest rates since inflation remains high. It is also worth paying attention to the comments of the First Deputy Director of the International Monetary Fund (IMF), Gita Gopinath, who confirmed that aggressive rate cuts by global regulators this year may begin no earlier than Q3. From the economic statistics, it is worth highlighting the publication of data on inflation in Germany for December and data on economic sentiment from the Center for European Economic Research (ZEW) for January. MoM, the consumer price index rose from -0.4% to 0.1%, and YoY – from 3.2% to 3.7%, which is likely to only strengthen ECB officials in their opinion about postponing the correction of monetary policy. The ZEW index of economic sentiment for Germany increased from 12.8 points to 15.2 points, and for the Eurozone it slightly decreased from 23.0 points to 22.7 points.
United Kingdom
GBP is weakening against USD and EUR but has ambiguous dynamics with JPY.
Investors are focused on the publication of November data from the labor market: unemployment remained at 4.2%, and employment adjusted by 73.0 thousand, with a forecast of 50.0 thousand and the previous value of 55.0 thousand, but the growth rate of average wages slowed sharply: the indicator excluding premiums in November amounted to 6.6% instead of 7.2% a month earlier, and with them, it increased by only 6.5% with a forecast of 6.8% and an October value of 7.2%. Thus, wages in the UK are growing at the slowest pace in almost a year. Under these conditions, the Bank of England may make the first interest rate adjustment as early as May.
Japan
JPY is weakening against EUR and USD but has ambiguous dynamics with GBP.
December wholesale inflation data was published today: MoM, the price index for corporate goods remained at 0.3%, and YoY, it decreased from 0.3% to 0.0%, confirming the Bank of Japan's opinion that the cost pressure on business caused by rising commodity prices will gradually weaken. At the same time, these statistics indicate an insufficient increase in overall inflation and the likely continuation of an ultra-soft monetary policy by the regulator in the near future.
Australia
AUD is weakening against its main competitors – EUR, JPY, GBP, and USD.
Today, January data on the Westpac consumer sentiment index were published, turning out to be weak: the indicator fell from 2.7% to -1.3% amid rising living costs and high interest rates. November data on the construction market also turned out to be negative: the total volume of construction permits increased by 1.6%, which is significantly less than the October figure of 7.2%, and the volume of permits for the construction of private houses decreased by 1.7% after an increase of 2.9% a month earlier.
Oil
Oil prices are rising today.
The strengthening of quotes is facilitated by increased tension in the Middle East: yesterday, Iran launched a series of missile attacks on the territory of Iraq and Syria, destroying a number of objects that, according to Iranian authorities, are associated with Israel, and the Yemeni Houthis attacked the American container ship Gibraltar Eagle. Thus, it has not yet been possible to eliminate the threats to maritime transport through the Red Sea, which forces large companies to send cargo around Africa, increasing transportation costs and investor fears about interruptions in the supply of “black gold” to the market.
United States of America
USD is significantly strengthening against its main competitors – EUR, JPY, and GBP.
In the absence of significant economic releases, the US currency continues to strengthen its position against alternative assets against the background of changing market sentiment: previously, most investors were confident that this year the US Federal Reserve would definitely start lowering interest rates and reduce them at least three times, however, recent economic data and comments from officials question this option. In December, employment in the United States shaply increased by 216.0 thousand, significantly exceeding expectations, and unemployment remained at 3.7% instead of the projected growth to 3.8%, but the rate of inflation accelerated from 3.1% to 3.4%. In this situation, representatives of the regulator began to think about postponing the transition to "dovish" rhetoric from March to the end of the year. Today, during the day, investors are waiting for the speech of the US Federal Reserve Governor Christopher Waller to the Brookings Institution with comments on further economic prospects. They may contain an assessment of the state of the US economy, as well as hints at the timing of the start of a reduction in the cost of borrowing.
Eurozone
EUR is moderately strengthening against GBP and JPY but is weakening against USD.
Investors remained focused on the comments of leading officials of the European Central Bank (ECB) made at the Economic Forum in Davos. Yesterday, the Austrian central bank chief Robert Holzmann said that the regulator may abandon the correction of monetary policy in 2024. This position was supported by Bundesbank President Joachim Nagel and Bank of France Governor Francois Villeroy de Galhau, who noted that it is too early for the ECB to discuss lowering interest rates since inflation remains high. It is also worth paying attention to the comments of the First Deputy Director of the International Monetary Fund (IMF), Gita Gopinath, who confirmed that aggressive rate cuts by global regulators this year may begin no earlier than Q3. From the economic statistics, it is worth highlighting the publication of data on inflation in Germany for December and data on economic sentiment from the Center for European Economic Research (ZEW) for January. MoM, the consumer price index rose from -0.4% to 0.1%, and YoY – from 3.2% to 3.7%, which is likely to only strengthen ECB officials in their opinion about postponing the correction of monetary policy. The ZEW index of economic sentiment for Germany increased from 12.8 points to 15.2 points, and for the Eurozone it slightly decreased from 23.0 points to 22.7 points.
United Kingdom
GBP is weakening against USD and EUR but has ambiguous dynamics with JPY.
Investors are focused on the publication of November data from the labor market: unemployment remained at 4.2%, and employment adjusted by 73.0 thousand, with a forecast of 50.0 thousand and the previous value of 55.0 thousand, but the growth rate of average wages slowed sharply: the indicator excluding premiums in November amounted to 6.6% instead of 7.2% a month earlier, and with them, it increased by only 6.5% with a forecast of 6.8% and an October value of 7.2%. Thus, wages in the UK are growing at the slowest pace in almost a year. Under these conditions, the Bank of England may make the first interest rate adjustment as early as May.
Japan
JPY is weakening against EUR and USD but has ambiguous dynamics with GBP.
December wholesale inflation data was published today: MoM, the price index for corporate goods remained at 0.3%, and YoY, it decreased from 0.3% to 0.0%, confirming the Bank of Japan's opinion that the cost pressure on business caused by rising commodity prices will gradually weaken. At the same time, these statistics indicate an insufficient increase in overall inflation and the likely continuation of an ultra-soft monetary policy by the regulator in the near future.
Australia
AUD is weakening against its main competitors – EUR, JPY, GBP, and USD.
Today, January data on the Westpac consumer sentiment index were published, turning out to be weak: the indicator fell from 2.7% to -1.3% amid rising living costs and high interest rates. November data on the construction market also turned out to be negative: the total volume of construction permits increased by 1.6%, which is significantly less than the October figure of 7.2%, and the volume of permits for the construction of private houses decreased by 1.7% after an increase of 2.9% a month earlier.
Oil
Oil prices are rising today.
The strengthening of quotes is facilitated by increased tension in the Middle East: yesterday, Iran launched a series of missile attacks on the territory of Iraq and Syria, destroying a number of objects that, according to Iranian authorities, are associated with Israel, and the Yemeni Houthis attacked the American container ship Gibraltar Eagle. Thus, it has not yet been possible to eliminate the threats to maritime transport through the Red Sea, which forces large companies to send cargo around Africa, increasing transportation costs and investor fears about interruptions in the supply of “black gold” to the market.
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