The U.S. dollar weakened to near 15-month lows against its major counterparts. The currency had a speculative plunge after the CPI numbers stood below market expectations which greatly benefited gold and other commodities priced in the greenback.
The dollar index, which measures the U.S. currency against a basket of six others and settled at 100.556, witnessed the biggest intraday fall since 13 March 2023.
Bullions posted its best intraday gain in more than two months. Both metals sparked nearly one-month highs after the dollar dropped drastically and Treasury yields after data showed U.S. consumer price index (CPI) inflation grew less than expected in June.
Gold Prices settled at 59188, up 0.71%. Silver prices settled at 73546 up by 3.42%. It was the biggest intraday gain since 8 June 2023.
At an average price of Rs 612 per share, private equity firm Apis Growth 15 Limited sold 52.84 lakh equity shares or 0.9% of the insurance company. The price per share for the stake sale was Rs 323.4. MCX Copper settled at 728.35, up 1.37%.
Crude oil gained nearly 0.85% on hopes the Federal Reserve may have fewer interest rate hikes in store for the world’s biggest economy.
An element that could limit price increases was a report from the US Energy Information Administration that showed a considerably larger-than-expected increase in US oil stockpiles of around 6 million barrels last week.
Economic data and events update
The annual increase in the US consumer price index was 3.0%, down from 4.0% in May. 3.1% growth had been predicted by economists. It constituted a sharp slowdown from the mark of 9.1% set in June of last year and was the lowest level in more than two years.
The core consumer price index, which excludes more erratic goods like food and energy, decreased to 4.8% annually and 0.2% monthly. Both measures were predicted to fall to 5.0% and 0.3%, respectively.
Bank of Canada (BoC) raised the benchmark interest rate by 25 basis points (bps) to 5%, as the market expected.
BoC Governor Tiff Macklem commented on the policy outlook that higher interest rates are necessary in order to slow demand growth in the economy and alleviate price pressures. He added that the BoC is likely to hike additional rates.
India’s June retail inflation rose to 4.81%, higher than both the revised 4.31% for the previous month and the 4.58% expected in a Reuters poll of 55 economists.
India’s industrial production rose to 5.2 per cent in May from 4.5 per cent in April 2023, mainly due to good performance by the manufacturing and mining sectors, according to the official data released on Wednesday.
Economic data and events to watch today
China
Tentative – Trade Balance. The forecast is 470B lower than the previous 452B
Tentative – USD-Denominated Trade Balance. The forecast is 74.0B higher than the previous 65.8 B.
Above data could have a neutral impact on the metals.
U.K.
At 11.30 am –
GDP m/m. Data is forecast to have a contraction of 0.3% from the previous expansion of 0.2%.
Construction Output m/m. Data is forecast to have a contraction of 0.5% from the previous contraction of 0.6%.
Goods Trade Balance. Data is forecast to have a contraction of 14.9B from the previous contraction of 15.0 B.
Industrial Production m/m. Data is forecast to have a contraction of 0.4% from the previous contraction of 0.3%.
Manufacturing Production m/m. Data is forecast to have a contraction of 0.5% from the previous contraction of 0.3%.
At 2.00 pm – BOE Credit Conditions Survey.
All the above data is expected to have a negative impact on the pound.
Eurozone
At 12.15 pm – French Final CPI m/m. Data is foreseen at 0.2%, unchanged from the previous.
Tentative – EU Economic Forecasts.
At 2.30 pm – Industrial Production m/m. Data is foreseen at 0.3% lower from the previous 1%.
All day – Eurogroup Meetings
At 5.00 pm – ECB Monetary Policy Meeting Accounts
All the above data could have a volatile impact on the Euro.
U.S.
At 6.00 pm –
Core PPI m/m set to release. Data is forecast to remain unchanged at 0.2%.
PPI m/m. Data is forecast to have an expansion of 0.2% against a contraction of 0.3%.
Unemployment Claims. Data is foreseen at 251K higher than the previous 248K.
At 8.00 pm – Natural Gas Storage. The forecast is 49B lower than 72 B.
At 11.30 pm – Federal Budget Balance. The forecast is to have a contraction of 173.5B compared to a contraction of 240.3 B.
All above data is expected to have a volatile impact on the dollar