On Friday, December 15, the financial world witnessed several significant events that could have a lasting impact on markets and currencies. In this article, we will delve into the key highlights of the day, shedding light on how they may shape the financial landscape.
USD Suffers Consecutive Losses
The US Dollar (USD) experienced a tumultuous day, marking its second consecutive day of heavy losses against major rivals. The US Dollar Index, which measures the currency's performance against a basket of other major currencies, declined below 102.00 for the first time since August. Although it faced a temporary setback, it managed to stabilize near that level early on Friday.
S&P Global Releases Preliminary PMIs
S&P Global, a renowned financial services company, released preliminary Purchasing Managers' Index (PMI) data for December. The PMI provides crucial insights into the manufacturing and services sectors in various regions. The Euro area, Germany, the UK, and the US all saw their PMIs released, which can significantly impact market sentiment and trading.
ECB Maintains Key Rates
The European Central Bank (ECB) held its key rates steady, in line with expectations. However, the ECB revised its inflation projections lower. In its policy statement, the ECB emphasized its commitment to maintaining policy rates at sufficiently restrictive levels for "as long as necessary." During the post-meeting press conference, ECB President Christine Lagarde's hawkish tone provided a boost to the Euro, pushing EUR/USD to multi-week highs above 1.1000.
BoE's Steady Policy
The Bank of England (BoE) concluded its last policy meeting of the year by keeping the policy rate unchanged at 5.25%. While three members of the Monetary Policy Committee (MPC) voted to raise the rate by 25 basis points, the BoE reiterated that monetary policy would remain restrictive for an "extended period of time." BoE Governor Andrew Bailey emphasized that it was premature to speculate about rate cuts, leaving interest rates at a historically high level. GBP/USD responded with bullish momentum, reaching its highest level since late August before undergoing a technical correction.
China's Economic Data
During Asian trading hours, China released key economic data. Industrial Production expanded by 6.6% on a yearly basis, surpassing market expectations. However, Retail Sales grew by 10.1% during the same period, falling short of the market's expectation for a 12.5% expansion. These figures provide insights into China's economic health and can influence global trade dynamics.
Judo Bank PMI in Australia
In Australia, the Judo Bank Composite PMI for December improved to 47.4 from 46.2 in November. Despite this positive change, the Australian Dollar (AUD/USD) showed minimal reaction, maintaining a sideways movement around 0.6700.
Swiss National Bank Keeps Rates Unchanged
The Swiss National Bank decided to keep its interest rate unchanged at 1.75%, aligning with market expectations. This decision had repercussions on the USD/CHF currency pair, which continued to decline and reached its lowest level since late July, dipping below 0.8650. Although it managed to recover slightly from its daily losses, it still faced a weekly decline of over 200 pips.
USD/JPY Hits Multi-Month Low
The USD/JPY currency pair extended its downtrend, reaching a fresh multi-month low below 141.00 on Thursday. After a late rebound, the pair appeared to stabilize at around 142.00 on the last trading day of the week, reflecting the volatility in the currency markets.
Gold Approaches $2,050
Gold prices surged on Thursday, coming within touching distance of $2,050. This increase was attributed to the 10-year US yield breaking below 4%. However, early on Friday, XAU/USD experienced a slight consolidation, trading just below $2,040, while the 10-year yield rebounded toward 4%. Gold remains a crucial asset in times of economic uncertainty, attracting investors seeking a safe haven.
Silver Faces Selling Pressure
Silver (XAG/USD) encountered selling pressure on Friday after a two-day winning streak. Despite reaching a one-week high the previous day, it stalled in its strong recovery from the mid-$22.00s, which marked a near one-month low. Currently, silver is trading just above the $24.00 round figure, reflecting a 0.40% decline for the day.
WTI Oil Price Rises
West Texas Intermediate (WTI) crude oil prices continued their upward trajectory for the third consecutive session. This bullish trend was driven by a favorable forecast from the International Energy Agency (IEA) regarding oil demand for 2024, coupled with a weaker US Dollar (USD). WTI oil traded at approximately $72.20 per barrel during the Asian session on Friday, demonstrating the interconnectedness of energy markets with currency movements.
In conclusion, December 15 was a day filled with significant developments in the financial world. The USD faced consecutive losses, while central banks in Europe and the UK made key decisions. Economic data from China and Australia provided insights into the global economy, and the precious metals market remained dynamic. As always, staying informed about these events is crucial for making informed investment decisions and navigating the ever-changing financial landscape.
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