The strengthening of the US dollar came to a halt on Tuesday’s trading after the Producer Price Index (PPI) in the United States showed a year-on-year increase of 3.3% in December, which was in line with the projections from Trading Central.
This sentiment is expected to impact market movements during the European trading session on Wednesday (January 15, 2025).
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GOLD
The price of Gold (XAUUSD) increased by nearly $15 or 150 pips in Tuesday’s trading, reaching $2,677.24 per troy ounce. The PPI data release rekindled expectations that the Federal Reserve would cut interest rates twice this year.
However, traders are now focusing on the upcoming Consumer Price Index (CPI) data from the United States, which could significantly affect Fed rate expectations.
This makes the rise in Gold prices likely to face resistance at the beginning of the European trading session, with potential downward pressure.
OIL
Oil prices (CLS10) fell by $0.70 to $78.07 per barrel on Tuesday after reaching a five-month high. This decline was triggered by profit-taking actions.
Moreover, negative sentiment from the EIA indicated that oil demand in the US is not expected to increase this year. Therefore, there is a possibility of further profit-taking during the European trading session.
EURUSD
EURUSD surged by 666 points (66.6 pips) to 1.03077 in Tuesday’s trading, moving away from the lowest levels since November 11, 2022.
This sharp increase occurred following the US PPI data release, which renewed expectations that the Fed would lower interest rates twice this year. However, with CPI data set to be released later tonight, there is a chance that EURUSD may come under pressure during the European session.
GBPUSD
GBPUSD experienced volatility at the beginning of Tuesday’s trading before closing at 1.22148. Compared to Monday’s close, GBPUSD rose by 121 points (12.1 pips).
The pair cannot rise sharply due to the upcoming UK CPI release at 14:00 WIB, which could determine GBPUSD’s direction in the near future. Data shows that the CPI for December is expected to grow by 2.7% YoY, higher than the previous month’s 2.6% YoY.
However, the core CPI, which excludes food and energy sectors, is predicted to grow by 3.4% YoY, down from the previous 3.5% YoY.
This data could pressure GBPUSD if the core CPI comes in below forecasts.
USDJPY
USDJPY climbed by 499 points (almost 50 pips) to 157.966 during Tuesday’s trading but dropped by 77 pips to 157.189 by noon.
This decline followed remarks from Bank of Japan Governor Kazuo Ueda, who stated that interest rates would increase if economic conditions and inflation improve.
This sentiment is expected to continue influencing USDJPY’s movements during the European trading session.
Nasdaq
The Nasdaq was highly volatile during Tuesday’s trading, ultimately ending unchanged at 20,976. The PPI data release failed to provide a positive sentiment for the stock index, compounded by the impending release of CPI data that could greatly influence expectations of a Fed rate cut.
As such, there is a possibility that the Nasdaq may face pressure at the start of today’s European trading session.
