The release of the inflation data (Consumer Price Index/CPI) from the United States on Wednesday triggered significant volatility in financial markets. The CPI for December was reported to have increased by 2.9% year-on-year (YoY), aligning with the forecast from Trading Central but higher than the previous month’s 2.7% YoY.
However, core inflation, which excludes energy and food sectors, was reported at 3.2% YoY, lower than last month and below the forecast of 3.3% from Trading Central. This release is expected to continue influencing market movement during the European trading session on Thursday (January 16, 2024).
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GOLD
The price of Gold (XAUUSD) surged by nearly $20, or 200 pips, reaching $2,697.01 per troy ounce during Wednesday’s trading, marking the highest level in the past month.
In today’s trading, the price of Gold continued to rise, briefly breaching the $2,700 mark per troy ounce for the first time since December 12, 2024.
The slowing growth of core inflation in the United States has strengthened expectations that the Fed will cut interest rates twice this year, which is likely to maintain a positive sentiment for Gold during European trading.
OIL
The price of Oil (CLS10) jumped by $2.68 to $80.75 per barrel during Wednesday’s trading. Oil is now at a six-month high and has surpassed $80 per barrel for the first time since August 13.
The increase followed the United States imposing sanctions on the Russian oil industry. Positive sentiment for Oil intensified after the EIA reported a decrease of nearly 2 million barrels in US oil inventories for the week ending January 10.
This sentiment is expected to continue influencing Oil movement in European trading.
EURUSD
EURUSD experienced high volatility before closing Wednesday’s trading at 1.02900. Compared to the close on Tuesday, EURUSD fell by 177 points (17.7 pips).
This movement indicates ongoing pressure on EURUSD due to economic slowdowns and the possibility of the European Central Bank (ECB) being more aggressive in cutting interest rates than the Fed.
Such sentiment will likely continue to impact EURUSD in the European trading session.
GBPUSD
GBPUSD showed significant volatility during Wednesday’s trading before managing to strengthen by 283 points (28.3 pips) to 1.22431. The slowdown in inflation growth in the UK is creating negative sentiment for GBPUSD, leading to its volatility.
The release of UK Gross Domestic Product (GDP) data at 14:00 WIB during the European trading session could act as a driver for GBPUSD. The forecast from Trading Central suggests that the GDP in November grew by 0.1% month-on-month (MoM) and 1.5% year-on-year (YoY), which is higher than last month’s -0.1% MoM and 1.3% YoY.
This data could provide positive sentiment for GBPUSD if it exceeds the forecast.
USDJPY
USDJPY dropped by 1.531 points (153.1 pips) during Wednesday’s trading and continued its decline by 122 pips to 155.206 today. USDJPY has been falling after the Governor of the Bank of Japan, Kazuo Ueda, stated that interest rates would be raised if economic conditions and inflation improve.
Conversely, market participants are optimistic that the Fed will cut interest rates twice this year. These sentiments could continue to exert pressure on USDJPY during the European trading session.
Nasdaq
The slowdown in core inflation growth in the United States has provided a boost for US stock indices. The Nasdaq jumped by 400 index points to 21,376 during Wednesday’s trading.
This data release has led market participants to feel optimistic that the Fed will implement two interest rate cuts this year, contributing further positive sentiment for the Nasdaq.
