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17/01/2025 - 09:12 UTCThe US dollar posted another moderate decline against most major currencies on Thursday, increasing its distance from the recently hit two-year high. The move came following U.S. retail sales that inched up 0.4% last month, following upward revisions to the previous month's figures, according to the U.S. Census Bureau. Concurrently, the number of Americans filing initial jobless claims exceeded expectations last week, although the overall level remains consistent with a robust labor market. The data sparked some bets that cooling inflation will invite more interest rate cuts from the Federal Reserve, especially after the producer price index, released on Tuesday, read lower than expected.
The U.S. dollar depreciated against the Japanese yen on Thursday. This decline was attributed to weaker-than-anticipated U.S. economic data and increasing expectations of a forthcoming interest rate increase by the Bank of Japan. As a result, the dollar plummeted to a near one-month low against the yen. The U.S. dollar also weakened against the euro, in a move that occurred as market participants assessed a range of mixed economic data to anticipate the potential trajectory of interest rate reductions by the Federal Reserve this year.
Wall Street gains took a small pause on Thursday as a jump in the prior session cooled, while investors eyed the most recent corporate earnings and gauged economic data to determine the path of Federal Reserve rate cuts. economic data on Thursday indicated consumer spending remains strong, while the labor market is also on solid footing, giving the Fed room to maintain a slow pace in cutting interest rates this year. Investors also focused on comments from Fed Governor Christopher Waller, who said the central bank could cut rates sooner and faster than expected as inflation is likely to continue to ease, which helped push Treasury yields lower.
On the cryptos front, Bitcoin surged past the critical $100,000 mark on Friday, driven by growing optimism surrounding the upcoming inauguration of U.S. President-elect Donald Trump next week. This upward trajectory is largely attributed to the anticipation of crypto-friendly policies under the incoming administration.
For Friday markets will most likely be focusing on the U.K. Retail Sales numbers, Eurozone inflation data (CPI), U.S. Building Permits and U.S. Housing Starts.
The EUR/USD pair traded within a narrow range on Thursday, hovering near the 1.0300 mark. With limited economic data scheduled for Friday, market participants remain attuned to any statements or signals from central bank policymakers.
On Thursday, Germany’s Harmonized Index of Consumer Prices (HICP) inflation data aligned with market expectations. Meanwhile, December’s Retail Sales data showed mixed results.
Looking ahead to Friday, the economic calendar remains light. Finalized HICP inflation data for the broader eurozone is expected to confirm a slight year-over-year (YoY) increase to 2.8% from 2.7%. Across the Atlantic, the U.S. will release December data on Housing Starts, Building Permits, and Industrial Production, all of which are forecasted to remain near previous levels.
Gold surged above the $2,700 mark on Thursday, bolstered by a pullback in the U.S. Dollar and declining Treasury yields.
The precious metal’s rally gained further momentum ahead of President-elect Donald Trump’s inauguration, as market participants positioned themselves for potential policy announcements.
Dovish remarks from Federal Reserve Governor Christopher Waller added fuel to gold’s ascent. Waller suggested the Fed could accelerate rate cuts if the disinflation trend continues, further softening bond yields and supporting bullion prices.
Oil prices edged lower on Thursday, influenced by expectations that Yemen’s Houthi militia will halt attacks on ships in the Red Sea and by strong U.S. retail sales data.
The Houthis stated they would monitor the ceasefire and could resume attacks if the agreement is breached. The ceasefire is scheduled to take effect on Sunday, with U.S. Secretary of State Antony Blinken confirming progress despite minor outstanding issues.
Oil prices briefly extended losses as investors weighed the possibility of slower rate cuts. However, remarks from Federal Reserve Governor Christopher Waller suggested inflation could ease enough to allow faster monetary policy adjustments, providing some support to oil markets.
U.S. stocks slipped on Thursday, pausing after a strong rally in the prior session. Investors evaluated corporate earnings and economic data to gauge the Federal Reserve’s trajectory for interest rate cuts.
Economic data revealed that consumer spending remained robust, and the labor market showed continued strength, signaling that the Fed has room to proceed cautiously with rate cuts in 2025.
Lingering concerns about inflation were compounded by the possibility of new tariffs under President-elect Donald Trump, who is set to take office on Monday.
The US Tech 100 faced pressure from a 4.04% decline in Apple as research firm Canalys reported that the iPhone maker was overtaken by Vivo and Huawei as China’s largest smartphone sellers in 2024.
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