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  • Writer's pictureSieracki Milosz

Market Dynamics Today: ECB Announcements, US Economic Indicators and Currency Movements

 Navigating Market Trends January 25 2024
Navigating Market Trends: ECB Policy Announcements and US Economic Indicators

As markets shift gears after Wednesday's volatility driven by PMI data releases, Thursday brings a more subdued atmosphere. Attention now turns to the European Central Bank (ECB) policy announcements, with key economic indicators on the US docket, including the fourth-quarter Gross Domestic Product (GDP), Durable Goods Orders, and Initial Jobless Claims.

USD's Wednesday Rollercoaster

Wednesday witnessed the US Dollar's initial weakening against peers amid prevailing risk flows. Later in the day, upbeat PMI data bolstered the currency, helping it recover losses. Early Thursday sees the USD Index (DXY) hovering above 103.00, while the 10-year US Treasury bond yield remains above 4%. The focus now turns to the US GDP, expected to show a fourth-quarter expansion of 2%, down from the previous quarter's robust 4.9% growth.

USD/CAD Strength and BoC Insights

USD/CAD surged on Wednesday, achieving its highest daily close since mid-December, driven by a bullish momentum. The Bank of Canada (BoC) maintained its policy rate at 5%, with Governor Tiff Macklem acknowledging discussions on the duration of keeping rates steady. Thursday sees USD/CAD consolidating above 1.3500.

EUR/USD Resilience Pre-ECB

EUR/USD capitalized on broad USD weakness on Wednesday, closing positively. However, the pair struggles to stabilize above 1.0900, anticipating the ECB's rate decision. ECB President Christine Lagarde's press conference at 13:45 GMT will shed light on the policy outlook.

GBP/USD Reaction to UK PMI Data

GBP/USD reached a two-week high post-UK PMI data but corrected lower later on Wednesday, settling above 1.2700. The pair remains sensitive to economic indicators and market sentiments.

RBA's Inflation Insights and AUD/USD Stability

The Reserve Bank of Australia (RBA) revealed expectations of moderated price growth over the past six months. AUD/USD, however, exhibited limited reaction and traded sideways below 0.6600.

USD/JPY Recovery Post-Wednesday Decline

USD/JPY faced a sharp decline on Wednesday but recovered modestly on Thursday, surpassing 147.50. The pair remains in focus amid market dynamics.

Precious Metals and PBoC's Influence

Gold faced selling pressure on Wednesday due to rising US Treasury yields. Early Thursday, XAU/USD hovers below $2,020. Meanwhile, Silver prices climb near $23, driven by the People’s Bank of China's (PBoC) liquidity infusion announcement.

WTI Oil Price Factors: PBoC and US Crude Oil Stockpiles

West Texas Intermediate (WTI) oil grapples to sustain gains, influenced by the PBoC's considerations for an MLF rate cut and a decline in US Crude Oil stockpiles. WTI inches higher around $75.50 per barrel during Thursday's Asian session.

As the day unfolds, global markets remain dynamic, responding to a mix of economic data, central bank decisions, and geopolitical factors. Stay tuned for updates as market trends continue to evolve.

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