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Dollar Gains as Yen Selloff Intensifies

The dollar index climbed toward 103 on Wednesday, lifted by a sharp yen decline after the Bank of Japan defied market expectations for another policy adjustment by maintaining ultra-low interest rates and keeping its yield control policy unchanged. Meanwhile, the greenback remained close to its lowest levels in over seven months after data showed that US annual inflation slowed for a sixth straight month to 6.5% in December, in line with market forecasts. That was also the lowest reading since October 2021, raising hopes that inflation peaked at 9.1% in June. The data cemented expectations that the Fed will downshift to a smaller 25 basis point interest rate hike in February after delivering a half-percentage point increase in December. Investors now look ahead to US producer inflation and retail sales data due later on Wednesday that could provide more clues on the central bank’s policy tightening path.

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gold scoring a 8 month peak. Bullish

Gold and silver prices are higher in early U.S. trading Wednesday, with gold scoring a 8 month peak. Bullish technical postures for the metals continue . Meantime, ideas of better economic growth in China are supporting metals prices on notions of increased demand. February gold was last up $4.50 at $1,880.60 and March silver was up $0.25 at $23.915. Global stock markets were mixed overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. Trader and investor risk appetite is not robust early in the new year, amid most major central banks that are still-hawkish on their monetary policies. However, risk aversion is not keen, either, due to hopes China’s economy, the second-largest in the world, will see improved growth after the Chinese government relaxed Covid restrictions. In overnight news, it appears most of the U.S. airline industry has seen its flights suspended due to a computer malfunction of unknown nature. The first thing that comes to many market watchers’ minds is a major cyber attack from a foreign country that could prompt a retaliation from the U.S.

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Gold Hits 6-Month Highs on Growth Concerns

Gold jumped 1% to around $1,840 an ounce on Tuesday, hitting its highest levels in 6 months as growth concerns dominated sentiment at the start of the year, with swiftly diminishing hopes that the US Federal Reserve could engineer a soft landing. IMF head Kristalina Georgiva warned that 2023 is going to be a tough year as the main engines of growth, namely the US, Europe and China, are all experiencing weakening activity. Investors now look ahead to a raft of data this week that could guide the outlook for growth and monetary policy, including manufacturing PMI data from major economies, a key monthly US jobs report and the latest Fed minutes. Meanwhile, gold ended 2022 nearly flat around $1,810 an ounce after experiencing wild swings throughout the period. The metal reached a near-record high of $2,070 in March at the onset of Russia’s invasion of Ukraine, before dropping to an over 2-year low of almost $1,600 in September on aggressive monetary tightening worldwide.