Financial Breakfast for January 26: Gold hovers near nine-month highs, focus shifts to U.S. data
On Thursday (January 26), Beijing time, the dollar slipped once morest the euro on Wednesday, but losses were limited as traders hesitated to make any big bets ahead of several central bank policy meetings next week; gold prices reversed losses , edged higher as the dollar weakened and investors kept an eye on a series of upcoming U.S. economic data that might affect the Federal Reserve’s monetary policy meeting next week.
Commodity closing situation:Brent crude oil futures closed at $86.12 a barrel, down $0.01, while U.S. crude futures closed at $80.15 a barrel, up $0.02; U.S. gold futures settled up 0.4% to $1942.6.
U.S. stocks closed:The Dow Jones Index closed up 0.03% at 33743.91 points; the S&P 500 Index closed down 0.05 points at 4016.90 points; the Nasdaq Composite Index closed down 0.18% at 11313.36 points.
thursday preview
precious metal
Gold prices reversed losses and edged higher on Wednesday, as the dollar weakened and investors kept an eye on a series of upcoming U.S. economic data that might affect the Federal Reserve’s monetary policy meeting next week; gold prices fell as much as 0.6% earlier in the session.
Jim Wyckoff, senior analyst at Kitco Metals, said some corrective price action and profit-taking by traders were responsible for gold’s slight pullback earlier in the day, “which is arguably healthy for the continuation of the uptrend.” Tuesday. Gold prices rose to a nine-month high, as fears of a global recession and hopes for a slowdown in rate hikes by the Federal Reserve boosted bullion’s appeal.
The Commerce Department is expected to release its preliminary estimate for fourth-quarter gross domestic product (GDP) on Thursday, which might set the tone for the Fed’s Jan. 31-Feb. 1 policy meeting. U.S. weekly jobless claims, new home sales and durable goods orders data were also released on Thursday.
Gold will need a new catalyst to push it higher, Rupert Rowling, market analyst at Kinesis Money, said in a note.
In other precious metals, spot silver rose 0.6% to $23.81 an ounce, platinum fell 1.5% to $1,041.63, while palladium fell 2.7% to $1,696.50.
Oil prices ended little changed on Wednesday following government data showed a smaller-than-expected build in U.S. crude stockpiles, offsetting weak economic data from Tuesday.Benchmark Brent crude fell 2.3% in Tuesday’s trade and U.S. crude futures slid 1.8% following data showed U.S. business activity shrank for a seventh straight month in January, stoking fears of an economic slowdown.
“Ultimately, the market is starting to get a little anxious regarding the economy and things like that, and the main concern right now is demand destruction from a slowing economy,” said Mizuho Bank analyst Robert Yawger.
U.S. crude briefly rose more than $1 on Wednesday following the Energy Information Administration (EIA) said U.S. crude inventories rose by 533,000 barrels last week to 448.5 million barrels. Analysts polled by Archyde.com expected an increase of 1 million barrels.
Crude oil prices rebounded into 2023, with global benchmark Brent topping $89 a barrel this week for the first time since early December, as China ended coronavirus restrictions and on hopes that the pace of rising U.S. interest rates would slow soon.
On the supply side, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+, are likely to endorse current output levels at a meeting on Feb. 1, and OPEC+ sources said on Tuesday output should remain stable.
foreign exchange
The dollar slipped once morest the euro on Wednesday, but losses were capped as traders hesitated to make any big bets ahead of several central bank policy meetings next week, including the Federal Reserve and the European Central Bank. In addition, much of Asia is in the middle of the Lunar New Year holiday, keeping most major currencies within familiar ranges.
“Trading ranges remain significantly compressed ahead of next week’s central bank meeting,” said Karl Schamotta, chief market strategist at Corpay.
Traders widely expect the Fed to raise interest rates by 25 basis points next Wednesday, a slowdown from December’s 50 basis point hike. Meanwhile, a 50 basis point rate hike by the European Central Bank next week is largely a given.
“Last year’s large directional trade has given way to a more nuanced pattern as global demand conditions remain healthy, inflation recedes and terminal interest rate expectations are well below peak levels,” Schamotta said. Wednesday’s absence of any major U.S. data led to Trading was thin.
Still, the market may be trading in a wider range later in the week as the U.S. Commerce Department releases preliminary fourth-quarter gross domestic product (GDP) data on Thursday, which is due in the next two days, Schamotta said. and personal consumption expenditures data are likely to surprise. If there’s one thing the post-COVID world has taught us, it’s that the ‘bullwhip effect’ can have unpredictable consequences for the real economy.
The euro rose 0.23 percent to $1.0913, not far from Monday’s nine-month high of $1.0927.
Data on Tuesday showed that business activity in the euro zone unexpectedly returned to modest growth in January. Expectations of further rate hikes by the European Central Bank also supported the euro.
German business sentiment improved in January as inflation eased and the outlook improved at the start of the new year, an Ifo survey showed on Wednesday. By contrast, data on Tuesday showed U.S. business activity shrank for a seventh straight month in January, although the decline in manufacturing and services slowed for the first time since September.
USD/JPY was down 0.42 percent at 129.615, having touched a near eight-month low of 127.215 on Jan. 16.
The Australian dollar soared to a more than five-month high on Wednesday following data showing higher-than-expected inflation supported the case for further rate hikes by the RBA; the Australian dollar was last up 0.76% at $0.7099.
Meanwhile, the New Zealand dollar fell 0.44% to $0.6479 following data showed that the country’s CPI rose 7.2% quarter-on-quarter in the fourth quarter, below the 7.5% forecast by the Reserve Bank of New Zealand.
Sterling rose 0.47% once morest the dollar in choppy trade following data showed British manufacturers unexpectedly lowered prices in December, suggesting inflation may be easing. The Bank of England will hold a policy meeting next week.
USD/CAD rose 0.18% following the Bank of Canada raised its benchmark overnight interest rate by 25 basis points to 4.5%, the highest in 15 years, and said it may pause hikes to assess the cumulative effect of previous hikes.
market news
NATO ramps up military aid, exacerbating Ukraine crisis
Recently, many NATO countries have increased their military aid to Ukraine. Analysts pointed out that as NATO countries increase their military aid to Ukraine, the crisis in Ukraine will further intensify. After entering the winter, both Russia and Ukraine have made no significant progress on the battlefield. Some Western military experts believe that both Russia and Ukraine may be preparing for the spring offensive. Analysts believe that as NATO countries increase their military aid to Ukraine, especially if Germany and the United States provide Ukraine with main battle tanks, the crisis in Ukraine may further intensify.
Russian President’s Press Secretary Peskov said on the 20th that the current crisis in Ukraine is spiraling upwards. NATO countries are increasingly involved in the conflict indirectly, even directly. Western countries supplying Ukraine with heavy weapons will not fundamentally change anything, it will only increase problems for Ukraine. Russian Deputy Foreign Minister Ryabkov said on the 23rd that the supply of advanced weapons to Ukraine by Western countries may lead to “unforeseen consequences.” The new round of weapons supply from the US and the West to Ukraine, especially the supply of heavy weapons, will inevitably intensify the situation on the battlefield (Xinhua News Agency)
Sweden’s NATO accession process hit hard
Swedish media reported on the 24th, citing sources from the Turkish foreign ministry, that the tripartite talks on joining NATO originally scheduled for February between Turkey, Sweden and Finland had been postponed indefinitely. Analysts point out that Sweden has encountered a major setback in the approval process for joining NATO.
In May last year, Sweden and Finland submitted applications to join NATO at the same time. At the NATO summit held in the following month, Turkey, Finland and Sweden signed a memorandum confirming that Turkey agreed to support Finland and Sweden to join NATO. Movement” and agreed to lift restrictions on the export of defense equipment to Turkey. In addition, the three countries agreed to establish a permanent joint mechanism to follow up the implementation of the MOU and strengthen cooperation in the field of common security. The Tripartite Standing Joint Mechanism held its first meeting in August last year.
Sweden and Finland have long pursued a policy of military neutrality, but turned to seek NATO membership following Russia launched a special military operation once morest Ukraine in late February last year. Finnish Foreign Minister Haavisto said on the 24th that if Sweden’s application to join NATO is delayed for a longer time, Finland may have to reconsider the simultaneous entry of Finland and Switzerland. In this regard, many media reported that this is the first time that Finland, which applied to join NATO at the same time as Sweden, publicly expressed its intention to “fly solo”.
New BOJ governor might phase out yield curve control within months
Former Bank of Japan Governor Eiji Maeda believes that the Bank of Japan may begin to phase out extraordinary measures such as the yield curve control policy within a few months following the new governor takes office in April.
The former governor who was in charge of monetary policy during the new crown epidemic said in an interview on Tuesday that the central bank is more likely to adjust policy within the first six months of a new governor, but even if the yield curve control policy and negative interest rates end, the central bank Monetary easing is still likely to continue to keep interest rates low.
Eiji Maeda also served as the Bank of Japan’s chief economist. Japan is on track to shed its entrenched deflationary mindset as the economy emerges from zero inflation, giving the central bank room to wind down its extreme stimulus, he said. Moderate inflation is starting to take hold, reducing the need for extraordinary measures, he said, noting that price gains are likely to remain in the 1% to 1.5% range. A business cycle in which inflation pushes up wages may begin to emerge. But Maeda said further policy adjustments were unlikely until Kuroda steps down on April 8.
Bank of Thailand raises rate by 25 bps for 4th straight time to keep inflation in check
Thailand’s central bank raised interest rates by 25 basis points for the fourth time on Wednesday to curb persistently high inflation, even as the return of Chinese tourists is boosting growth prospects. The Bank of Thailand said its policy committee voted unanimously to raise the one-day repurchase rate by 25 basis points to 1.50%, effective immediately.
Thailand’s consumer price index (CPI) rose by 5.89% year-on-year in December, well above the 1%-3% inflation target range set by the Bank of Thailand. While inflation is well above the central bank’s target, it has eased from a peak of 7.86% in August. In December, the core CPI excluding food and energy prices rose by 3.23%.
Some economists have said they expect the policy rate to peak at 1.50% in the current tightening cycle as inflation eases. Last August, the Bank of Thailand raised its policy rate for the first time in nearly four years from a record low of 0.50%. Thailand’s gross domestic product (GDP) grew 4.5% in the third quarter from a year earlier, helped by the easing of coronavirus restrictions and a recovery in tourism from international tourists.
EU Adopts Cross-Border Access to Electronic Evidence Regulation and Draft Directive
On January 25 local time, the Council of the European Union announced that the Council of the European Union and the European Parliament had reached an agreement on draft regulations and directives on cross-border access to electronic evidence. The relevant provisions will enable EU authorities to send judicial instructions to obtain electronic evidence directly to relevant data providers in other member states. The justice minister of Sweden, which holds the EU presidency, said the new rules would allow judges and prosecutors to quickly access evidence before it disappears, no matter where it is stored. (CCTV News)
Dutch PM: EU should reform rather than fight US inflation-cutting bill with new subsidies
On the evening of January 24 local time, Dutch Prime Minister Mark Rutte told the media in Brussels that the EU should not add new subsidies, but should reform national policies to protect European industries from being destroyed by the US “Inflation Reduction Act”. Rutte said that there is already a lot of money in the system, and that subsidies and loans should no longer be given, but deep reforms should be carried out. Many European countries spend too much on pension systems that might be spent on innovation and green technology. Previously, the EU has repeatedly proposed to provide financial support to European companies to fight once morest the US “Inflation Reduction Act”. (CCTV News)
Senator Manchin to introduce bill to delay EV tax credit
Democratic U.S. Senator Manchin said he would introduce a bill on Wednesday to delay the implementation of a new tax credit for electric vehicles, amid disagreements with the Treasury Department over how to implement the program, the Wall Street Journal reported. The program is an integral part of the Inflation Reduction Act. The new tax credit program of up to $7,500 per vehicle has come under fire from European and Asian allies who say the rules, designed to spur domestic car and battery production, are unfair to foreign manufacturers. However, sources said that Manchin’s bill will face an uphill battle. At present, the bill has no co-sponsors, and Manchin has not contacted other Democratic members of Congress.
About 6,000 employees at Berlin Airport in Germany go on strike
On January 25, local time, regarding 6,000 employees at Berlin-Brandenburg International Airport in Germany went on strike, demanding higher wages and better working conditions. The German service industry trade union previously announced that the strike was a warning strike and would last from 3:30 a.m. to 23:59 a.m. on the 25th. The airport operating company stated that due to the strike, all commercial passenger flights will be canceled that day, and the travel of regarding 35,000 passengers will be affected. (CCTV News)
During the Spring Festival holiday, ski resorts around the world ushered in peak passenger flow
During the Spring Festival holiday, ski resorts around the world ushered in peak passenger flow. With the development of ice and snow sports, you can now experience the charm and joy of skiing in the south. During the Spring Festival holiday, in Quanzhou County, Guilin, Guangxi, many tourists from surrounding provinces came to the alpine outdoor ski resort at an altitude of more than 1,700 meters. In Chongqing, during the Spring Festival, the number of tourists to several ski resorts continued to rise. At a ski resort in Yichang, Hubei, before 10 am, the ski equipment collection area was full of people who came to ski. More than 70 ski instructors were all dispatched, and the supply was still “in short of demand”. (CCTV News)
