The financial markets showed diverse movements at the beginning of the European trading session on Wednesday (January 15, 2024), in anticipation of the upcoming inflation data (Consumer Price Index/CPI) from the United States scheduled for 20:30 WIB. This release might trigger significant movements across all markets.
Here are the forecasts from Trading Central:
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- US CPI (year-on-year/December): forecast 2.9% vs previous 2.7%
- Core US CPI (year-on-year/December): forecast 3.3% vs previous 3.3%
GOLD
Gold prices (XAUUSD) rebounded to US$ 2,688.43 per troy ounce at the start of the European session after dipping to US$ 2,669.18 per troy ounce earlier.
Despite the uptick, Gold might face downward pressure if the US inflation data is released higher than the forecast. This situation could lead market participants to believe that the Federal Reserve will only cut interest rates once this year.
OIL
As projected in the previous Macro Overview, Oil prices dropped at the beginning of the European session, hitting a daily low of US$ 77.22 per barrel. Compared to the closing price from Tuesday, Oil fell by US$ 0.85.
Profit-taking actions contributed to the decline after reaching a five-month high. Additionally, negative sentiment arose from the EIA, indicating that Oil demand in the US will not increase this year. Oil may continue to be under pressure if the US CPI data is released higher than the forecast, potentially strengthening the US dollar. A stronger dollar presents negative sentiment for Oil prices.
EURUSD
EURUSD traded within the range of 1.02867 – 1.03172 until the early European session. This limited range indicates that market participants are awaiting the release of the US CPI data tonight.
If the data comes out higher than the forecast, EURUSD may face downward pressure.
GBPUSD
GBPUSD exhibited high volatility within the range of 1.21549 – 1.22408 at the start of the European session, responding to the release of UK CPI data showing a slowdown in growth.
The CPI for December was reported at 2.5% year-on-year (YoY), down from the previous month’s 2.6%, and contradicting the forecast increase to 2.7% from Trading Central. Meanwhile, the core CPI, excluding food and beverage sectors, grew by 3.2%, also lower than both the forecast and the previous month.
Given these developments, GBPUSD may experience further downward pressure if the US CPI data is released higher than the forecast.
USDJPY
USDJPY plummeted to 156.707 at the beginning of the European session, down by 1.259 points (125.9 pips) compared to Tuesday’s close.
This sharp drop occurred after the Governor of the Bank of Japan, Kazuo Ueda, stated that interest rates would be increased if economic and inflation conditions improve.
Considering the significant drop, there is potential for USDJPY to recover tonight if the US CPI is released higher than the forecast.
Nasdaq
The Nasdaq index has remained relatively stable through the early European trading session, trading in the range of 20,908 – 20,970. This volatility is expected to increase dramatically this evening in response to the US CPI data release.
The upcoming data could significantly influence expectations regarding the Fed’s interest rates. Therefore, if released above the forecast, there is potential for Nasdaq to face pressure.
