The dollar weakens nearly half percent against the major currencies after rising in eight of the last 10 sessions, as investors consolidated gains spurred by a broad reversal of the greenback’s decline in December. While, the yen’s rise to followed Japanese bond yields jumping to six-week highs.
Bank of Japan President Kazuo Ueda said on Tuesday that the outlook for meeting the central bank’s and inflation targets is gradually improving, fueling expectations that the country will soon leave ultra-loose monetary policy behind.
Euro struggled to benefit from the positive risk sentiment after the release of data showing that Germany’s economic downturn worsened this month with both manufacturing and services activity contracting.
Germany’s Ifo institute downgraded its 2024 economic growth forecast on Wednesday, and now expects Europe’s largest economy to grow by 0.7% this year instead of 0.9% previously forecast in mid-December
Crude oil prices rose slightly, as China’s economic stimulus package and geopolitical tensions responded to concerns about tepid demand and a stronger dollar.
China’s central bank will reduce the amount of cash banks must hold as reserves starting February 5, Governor Pan Gongsheng said on Wednesday. It is the first cut this year as policymakers continue efforts to shore up a fragile economic recovery.
U.S. crude inventories fell by 6.67 million barrels in the week ended Jan. 19, market sources said, citing data from the American Petroleum Institute on Tuesday. But gasoline inventories rose by 7.2 million barrels, raising concerns about fuel demand globally and in the world’s biggest oil consumer.
Gold retreated after data showed strong US business activity, although dollar weakness was limited, while investors waited for more economic data to gauge when the Federal Reserve might cut interest rates.
copper futures jumped above 1.50%, the highest in three weeks, supported by a slight weakening of the US dollar and further stimulus measures from the Chinese government.
China said it would reduce its reserve requirement over the next two weeks, aiming to provide 1 trillion yuan of liquidity, and hinted at more monetary support in the near future.
MCX gold futures down 0.03% to 61985. Silver settled up 1.29% at 71869. Copper up 1.77% to 729.90. Crude oil up 1.08% at 6272. Natural gas up 4.38% to 185.80.
Economic data and events scheduled – Will ECB policy set the stage?
Japan
Tentative –
At 5.20am – Trade Balance. Data is foreseen at -0.45T from previous -0.41T.
At 6.00am – Flash Manufacturing PMI. Data is foreseen at 48.2 from previous 47.9.
Above data could have a volatile impact on the Japanese Yen.
UK
At 4.30pm- CBI Realized Sales. Data is foreseen at -19 from previous -32.00.
Above data could have a mixed impact on the pound.
Eurozone
At 2.30pm- German ifo Business Climate. Data is foreseen at 86.7 from previous 86.4.
At 6.45pm-
Main Refinancing Rate. Data is foreseen at 4.50% unchanged from previous 4.50%.
Monetary Policy Statement.
At 7.15pm- ECB Press Conference.
At 7.30pm- Belgian NBB Business Climate. Data is foreseen at -11.9 from previous -12.7.
All above data could have a volatile impact on the Euro.
US
At 7.00pm-
Advance GDP q/q. Data is foreseen at 2.0% from previous 4.9%
Unemployment Claims. Data is foreseen at 199k from previous 187k.
Advance GDP Price Index q/q. Data is foreseen at 2.3% from previous 3.3%.
Core Durable Goods Orders m/m. Data is foreseen at 0.2% from previous 0.4%.
Durable Goods Orders m/m. Data is foreseen at 1.2% from previous 5.4%.
Goods Trade Balance. Data is foreseen at -88.7B from previous -90.3B.
Prelim Wholesale Inventories m/m. Data is foreseen at -0.2% from previous -0.2%
At 8.30pm- New Home Sales. Data is foreseen at 648K from previous 590k.
At 9.00pm- Natural Gas Storage. Previous was at -154B.
Above data could have a Volatile impact on the dollar.
Commodity Samachar
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