Important calendar events
The dollar gained strength on Thursday and the dollar index rose from 107.9 to 108.2. US treasury yields edged lower, with the US 10-year bond yield dropping from 4.54% to 4.52%.
The US Federal Reserve held interest rates steady at its January meeting, which was concluded on Wednesday, after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%, which was in line with expectations.
The Fed’s latest monetary policy statement did not include an earlier mention that US inflation is moving towards the central bank’s 2% target. Instead, the report stated that price pressures remain elevated, leading to a prolonged pause in rate cuts. The Fed’s statement highlighted that the US labor market remains robust and that the economy is expanding satisfactorily.
Fed Chair Jerome Powell delivered a mildly hawkish message after the policy meeting, boosting the dollar. Powell stated that the Fed’s approach will remain data-driven and stressed that the central bank needs to consider potential policy changes under Trump’s administration. Market odds of another rate cut before summer dropped after Powell’s speech, with markets pricing in a rate cut in June at the earliest.
Donald Trump’s Presidential inauguration at the US capitol attracted market attention last week as Trump was sworn in as the 47th president of the United States. The dollar has been volatile as markets await Trump’s policies and trade tariffs.
Trump has already announced a plan to impose 25% tariffs on imports from Canada and Mexico starting February 1 and he has hinted that his administration is considering universal tariffs on all imports to the US. Rumors of a potential 10% duty on imports from China to the US ignited concerns that other nations may face trade tariffs as well. Trump later went back on his comments on imposing trade tariffs on China, after having a phone conversation with Chinese President Xi Jinping. Over the weekend, Trump threatened Colombia with 50% tariffs on their imports after the country refused to take in deported immigrants from the US. On Monday, however, the Colombian government backed down on accepting deportees from the US, and trade tariffs against the country have been put on hold.
Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. On Tuesday, newly appointed US Treasury Secretary Scott Bessent proposed tariffs on all US imports, which would start at 2.5% and could be gradually increased. Trump, however, stated that he wants more aggressive tariffs, saying that he will apply tariffs to chips, pharmaceuticals, steel, and copper.
Trump posted tariff threats on his social media on Thursday, causing market turmoil. Trump reiterated threats to impose e 25% import tax on all goods crossing the border into the US from Canada and Mexico over the weekend and also renewed threats of tariffs against China. Trump’s comments triggered a risk aversion sentiment and demand for safe-haven assets rose, boosting the dollar.
On the data front, Advance GDP data for the fourth quarter of 2024 showed that the US economy expanded by 2.3%, following a 3.1% expansion in the third quarter of 2024 and falling below market estimates of 2.7% growth. In addition, the US economy expanded by 3.0% in the second quarter of the year and by 1.4% in the first quarter of the year.
GDP Price Index data on Thursday fell below expectations, indicating that price pressures in the US are not as high as initially expected. GDP Price Index rose to 2.2% in Q4 of 2024 from 1.9% previously, falling short of expectations of 2.7% growth. Initial Jobless Claims released on Thursday rose to 207K for the week ending January 25, missing estimates of 224K and falling below the previous week's print of 223K.
US Durable Goods Orders released on Tuesday were disappointing, putting pressure on the dollar. Durable Goods Orders contracted 2.2% in December, following a 1.2% decrease reported in November, disappointing market expectations of 0.3% growth. Core Durable Goods Orders, which exclude transportation items, rose by 0.3% in December after dropping by 0.2% in November and against expectations of 0.4% growth. In addition, CB Consumer Confidence Index dropped to 104.1 in January from 109.5 in December against market expectations of 105.7 according to data released on Tuesday. On the other hand, The Richmond Manufacturing Index improved to -4 in January from -10 in December, beating expectations of a -8 reading.
Disinflation in the US is progressing, which may affect the Fed’s rate outlook. Headline inflation rose by 2.9% year-on-year in December from 2.7% in November, which was in line with expectations. Monthly inflation rose by 0.4% in December against 0.3% in November, as expected. Core CPI, however, which excludes food and energy, rose by just 0.2% in December following a 0.3% rise in November and against expectations of a 0.3% print. Core CPI rose 3.2% year-on-year in December, below estimates for a 3.3% increase and November’s 3.3% gain.
EUR/USD surged from 1.042 to 1.046 after the ECB rate decision on Thursday, but pared gains later in the day, dropping to 1.040. If the EUR/USD pair declines, it may find support at 1.034, while resistance may be encountered near 1.053.
The ECB lowered its benchmark interest rate by 25 basis points on Thursday, bringing its main refinancing rate down to 2.90% from 3.15%. The central bank is currently expected to cut interest rates up to four more times in 2025, to a total of 125bps, until neutral policy settings are reached. Expectations that the ECB will return to a more normalized policy setting sooner than the Fed are putting pressure on the EUR/USD rate.
In her speech after the policy meeting, ECB President Christine Lagarde stressed that EU policymakers will not commit to a predefined rate cut path and that the central bank’s policy will remain data-driven.
Lagarde also commented on the Eurozone GDP data released earlier on Thursday that showed that the EU economy is stagnant and stated that the ECB expects the economy to remain weak for some time. She also hinted that the trade tariffs that the US might impose will hinder economic growth and warned that increased friction in global trade could weigh on the Eurozone’s economy. Lagarde, however, denied that there is a danger of stagflation, the toxic economic mix of stagnating economy and high inflation. Lagarde admitted that inflation in the Eurozone is expected to hover around the current levels in the short term but appeared confident that inflation will come down to the central bank’s 2% target within the year.
On the data front, German Preliminary GDP data released on Thursday showed that the Eurozone’s leading economy is entering a recession. The German economy contracted by 0.2% in the fourth quarter of 2024, following a 0.1% expansion in the third quarter, against expectations of a 0.1% decline.
Preliminary Flash GDP data released on Thursday showed that the Eurozone economy remained stagnant in the final quarter of 2024 after expanding by 0.3% in the second quarter. Preliminary Flash GDP data disappointed expectations of 0.1% growth in Q4 of 2024, raising concerns about stagflation in the EU. The economic outlook of the EU remains fragile as prolonged tightening has brought the Euro area economy to the brink of recession.
German IFO Business Climate data on Monday showed that German business sentiment is improving. The German IFO Business Climate index rose to 85.1 in January from 84.7 in December, against expectations of an 84.9 print.
Eurozone inflation remains above the ECB’s 2% target and may prevent the ECB from cutting interest rates further. Eurozone inflation rose to 2.4% year-on-year in December from 2.2% in November. Every month, Eurozone inflation rose 0.4% in December after dropping 0.3% in November. Core CPI, which excludes food and energy, remained steady at 2.7% in December.
GBP/USD dropped from 1.244 to 1.242 on Thursday as the dollar gained strength. If the GBP/USD rate goes up, it may encounter resistance at 1.252, while support may be found near 1.222.
The BOE kept interest rates steady at its latest policy meeting, having cut interest rates twice already this year. MPC members voted 6-3 to keep rates on hold, with three members in favor of cutting interest rates.
Bank of England Governor Andrew Bailey has stated that the central bank needs to adopt a gradual approach to future rate cuts. Bailey has also stressed that the BOE’s policy outlook will remain data-driven and refused to commit to a timeline or magnitude of future rate cuts.
In an interview on Bloomberg on Tuesday, British Prime Minister Keir Starmer stated that he anticipates a turnaround in the UK’s economy. Starmer also appeared optimistic about the UK’s trade relationship with the US. The UK seems to be at an advantage at a time when most other nations are concerned about the imposition of trade tariffs by Trump’s administration. Starmer stressed that the UK’s trading relationship with the US is excellent and that he expects this relationship to improve further in the future.
Chancellor of the Exchequer Rachel Reeves reiterated Starmer's message in a speech in Oxfordshire on Wednesday. Reeves stated that the British economy is on the brink of a turnaround, echoing Starmer’s previous message and boosting the Sterling.
The British economy expanded by just 0.1% in November, disappointing expectations of 0.2% growth and following contraction by 0.1% in October. Final GDP data for the third quarter of the year have previously shown that the British economy is stagnating. Earlier forecasts indicated slight economic growth by 0.1% in the third quarter of 2024, but the British economy is being stifled by high interest rates and cannot expand.
Price pressures in the UK are easing, raising the odds of a BOE rate cut in February and providing support for the Sterling. Headline inflation in the UK rose to 2.5% year-on-year in December, dropping from 2.6% in November, against expectations of a 2.6% print. Core inflation, which excludes food and energy, also came in lower than expected, rising by 3.2% annually in December, against a 3.5% reading in November and 3.4% anticipated.
This coming week only minor fundamentals are scheduled to be released for the UK. Markets will focus on BOE Governor Andrew Bailey’s testimony on the Financial Stability Report on Wednesday. Before the Treasury Select Committee. Traders will follow Bailey’s speech closely for hints on the BOE’s policy outlook.
The Yen gained strength on Thursday and USD/JPY dropped from 155.1 to 154.1. If the USD/JPY pair declines, it may find support at 153.1. If the pair climbs, it may find resistance at 156.7.
The BOJ raised interest rates by 25 basis points after the conclusion of its monetary policy meeting on Friday. The BOJ raised its interest rate from 0.25% to 0.50%, its highest level since 2008. In addition, the BOJ adjusted its inflation projections upward, to reflect the depreciation of the yen and rising oil prices, hinting at more rate hikes down the road. Policymakers expect Japan’s inflation to rise to 2.4% in 2025, up from previous estimates of 1.9%, and above the central bank’s 2% target.
BOJ Governor Kazuo Ueda hinted that the central bank will continue to raise interest rates if Japan’s economy continues to improve and the BOJ 2% inflation target is reached. Ueda emphasized, however, that the timeline of future rate hikes will depend on economic and inflationary conditions.
BOJ Deputy Governor Ryozo Himino stated on Thursday that the central bank will continue to raise rates if the economic growth and inflationary pressures in Japan fall within the BOJ’s estimates. Market expectations of BOJ rate hikes are rising, boosting the Yen. Markets currently anticipate that the BOJ will raise interest rates to a peak interest of 1.00% over the next two years.
Inflation in Japan is on the rise, raising the odds of future rate hikes and providing support for the Yen. The headline Tokyo CPI inflation rose to 3.0% annually in December, up from 2.6% in November. Headline inflation in Japan rose by 3.0% year-on-year in December from 2.7% in November, which was in line with expectations. In addition, BOJ Core CPI rose to 1.7% year-on-year in November from 1.5% in October against expectations of 1.5%.
Final GDP data for the third quarter of the year showed that Japan’s economy expanded by 0.3%, exceeding initial estimates of 0.2%, but down from 0.7% in the second quarter. The Japanese economy is expanding, after shrinking by 0.5% in the first quarter of the year.
The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.
Written by:
Myrsini Giannouli
ได้รับการยอมรับในอุตสาหกรรม ในฐานะผู้ให้บริการสภาพคล่อง
และการดำเนินคำสั่งที่ไว้วางใจได้
เงินของลูกค้า
แบบเฟิร์สคลาส
เว็บไซต์ที่คุณกำลังดูอยู่นี้ดำเนินการโดย TopFX Global Ltd ซึ่งเป็นหน่วยงานที่ควบคุมโดย Financial Services Authority (FSA) ของเซเชลส์ โดยมีใบอนุญาตตัวแทนจำหน่ายหลักทรัพย์หมายเลข SD037 ซึ่งไม่ได้จัดตั้งขึ้นในสหภาพยุโรปหรือควบคุมโดย EU National Competent อำนาจ.
หากคุณต้องการดำเนินการต่อ โปรดยืนยัน ว่าคุณเข้าใจและยอมรับความเสี่ยงที่เกี่ยวข้องกับการซื้อขายกับหน่วยงานนอกสหภาพยุโรป (เนื่องจากความเสี่ยงเหล่านี้อธิบายไว้ใน แบบฟอร์มรับทราบความคิดริเริ่ม และการตัดสินใจของคุณจะขึ้นอยู่กับความคิดริเริ่มของคุณเองและไม่มีการร้องขอใด ๆ โดย TopFX Global Ltd หรือหน่วยงานอื่น ๆ ภายในกลุ่ม
อย่าแสดงข้อความนี้อีก
เว็บไซต์ TopFX ใช้คุกกี้เพื่อเพิ่มประสิทธิภาพประสบการณ์ผู้ใช้
คุกกี้เหล่านี้จัดอยู่ในหมวดหมู่ต่อไปนี้: คุกกี้ที่จำเป็น การทำงาน และการตลาด คุกกี้การตลาดอาจรวมถึงคุกกี้ของบุคคลที่สามด้วย
คุณสามารถปรับแต่งการเลือกของคุณว่าต้องการยอมรับคุกกี้ใด
คุกกี้เหล่านี้จำเป็นสำหรับเว็บไซต์เพื่อให้ทำงานได้อย่างถูกต้องและไม่สามารถปิดได้
คุกกี้การทำงานช่วยให้เว็บไซต์จดจำการตั้งค่าของผู้ใช้และตัวเลือกที่คุณทำบนเว็บไซต์ เช่น ชื่อผู้ใช้ ภูมิภาค และภาษา
คุกกี้เหล่านี้ใช้เพื่อติดตามผู้เยี่ยมชมเว็บไซต์ของเราและแสดงโฆษณาที่เกี่ยวข้องมากขึ้น คุกกี้การตลาดยังรวมถึงคุกกี้ของบุคคลที่สามจากพันธมิตรด้วย สำหรับข้อมูลเพิ่มเติมเกี่ยวกับการปกป้องข้อมูลและการเก็บรวบรวม โปรดดูนโยบายความเป็นส่วนตัวและการเปิดเผยคุกกี้ของเรา
