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  • Writer's pictureSieracki Milosz

Forex Dynamics: USD Retreats CPI Data Awaited and Global Market Shifts

Global Market Shifts

In the intricate world of Forex, Thursday unfolds with the US Dollar (USD) taking a step back, as the USD Index retreats towards 102.00. The week's highlight includes Weekly Initial Jobless Claims and eagerly anticipated Consumer Price Index (CPI) figures for December, set to shape the US economic landscape later in the day.

USD's Retreat Amidst Improved Risk Sentiment

The USD faced challenges early Thursday, with the USD Index retracing toward 102.00 after concluding Wednesday in negative territory. The absence of high-tier macroeconomic releases coupled with an improved risk mood during American trading hours on Wednesday weighed on the USD's resilience against its counterparts. US stock index futures reflected a positive sentiment, rising between 0.2% and 0.4%. Concurrently, the 10-year US Treasury note auction reported a high-yield of 4.02%, down from December's 4.29%, further burdening the currency.

Anticipation Surrounding CPI Figures

Eyes are on the US economic docket as the market awaits the release of CPI figures. Projections indicate a forecasted increase to 3.2% on a yearly basis from November's 3.1%. The Core CPI, excluding volatile food and energy prices, is expected to rise by 0.3% on a monthly basis.

Australian Economic Shifts Impact AUD/USD

In the Asia-Pacific region, Australian data revealed a 7.9% decline in Imports and a 1.7% increase in Exports for December. Despite small gains on Wednesday, AUD/USD continued its upward trajectory in Asian trading hours, maintaining positive territory above 0.6700.

Euro and Pound's Moves

EUR/USD gained momentum in the second half of Wednesday, closing above 1.0950 and inching higher towards 1.1000. Meanwhile, GBP/USD reclaimed 1.2700 during the American session on Wednesday, extending its rebound in the Asian trading hours on Thursday. The pair reached its highest level in nearly two weeks, trading around 1.2770.

USD/JPY's Contradictory Path

In a contradictory turn, despite renewed USD weakness, USD/JPY surged towards 146.00 and posted strong gains on Wednesday. However, a technical correction ensued early Thursday, with the pair trading in negative territory below 145.50.

Precious Metals' Response to Market Dynamics

Gold experienced marginal losses on Wednesday as the 10-year US Treasury bond yield stabilized near 4%. XAU/USD managed to cling to modest recovery gains, hovering slightly above $2,030.

Silver (XAG/USD) regained positive traction on Thursday, seemingly breaking a three-day losing streak. The white metal traded around the $22.80-$22.75 region, marking a recovery from the previous day's low.

Oil Markets Navigate Geopolitical Ripples

West Texas Intermediate (WTI) prices retraced recent losses, trading higher near $71.70 per barrel during the Asian session on Thursday. Crude oil prices gained momentum on concerns about potential supply disruptions following Yemen's Houthi criticism of the United Nations (UN) resolution on Red Sea navigation.

Natural Gas's Rollercoaster Ride

Natural Gas experienced a notable surge earlier in the week, nearing $3. However, the price retraced to $2.70 as markets witnessed no supply issues and lackluster demand from the industry. Anticipate muted reactions unless a supply hiccup emerges, particularly from the Middle East.

Thursday's Forex dynamics showcase a nuanced interplay of economic indicators, geopolitical events, and market sentiment. As the day unfolds, market participants keenly await the CPI figures, poised to provide further clarity on the USD's trajectory in the ever-evolving global financial landscape.

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