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  • Writer's pictureSieracki Milosz

Market Insights: USD Strength, Global Trends and Precious Metals Surge

Market Insights January 12 2024

In the dynamic landscape of global finance, the US Dollar (USD) took center stage, showcasing an initial surge in response to December's inflation figures. However, its supremacy faced a challenge as US Treasury bond yields retreated later in the American session. As we delve into the market movements, let's explore the key highlights that shaped the recent financial landscape.

USD's Initial Triumph and Subsequent Challenges

The USD demonstrated resilience, propelling to a five-day high of 102.76 against a basket of currencies following the release of the Consumer Price Index (CPI) data for December. The report, issued by the US Bureau of Labor Statistics (BLS), revealed a 3.4% year-on-year increase, surpassing expectations and marking a notable uptick from November's 3.1%. Despite this robust start, the USD Index closed the day below 102.50 as the 10-year US Treasury bond yield failed to sustain levels above 4%.

Global Market Dynamics: China's Influence

Turning our attention to Asia, China's economic data presented a mixed picture. The Consumer Price Index in December showed a marginal 0.1% monthly increase, contrasting with the previous month's 0.5% decrease. Additionally, China's trade surplus widened to $75.34 billion, surpassing expectations. However, this did not immediately translate into significant market movements, with the Shanghai Composite and the Hang Seng indexes trading flat.

European Developments: GBP Resilience, ECB Insight

In Europe, the UK's Office for National Statistics (ONS) reported a 0.3% monthly growth in Gross Domestic Product (GDP) for November, rebounding from October's contraction. Industrial and Manufacturing Production also expanded in the same period. The British Pound (GBP) displayed resilience, hovering above 1.2750, seemingly unfazed by the positive economic indicators.

European Central Bank Chief Economist Philip Lane's upcoming speech could provide valuable insights during the European trading hours, potentially influencing market sentiment.

Currency Trends: EUR/USD Stability, GBP/USD Reaction

EUR/USD experienced volatility during the American session but settled above 1.0950. The pair's performance will likely be influenced by external factors, including economic speeches and global market sentiment. GBP/USD, on the other hand, maintained a narrow range above 1.2750, showing limited reaction to positive UK economic data.

Precious Metals: Gold and Silver Shine

Gold (XAU/USD) capitalized on declining US bond yields, securing marginal gains above $2,030. Silver (XAG/USD) rallied to near $23.35, fueled by a softer-than-anticipated Producer Price Index (PPI) report for December. The PPI contraction and stagnant core PPI contributed to the metals' upward trajectory, attracting investor attention.

Oil Market Concerns: WTI's Rally Amid Tensions

West Texas Intermediate (WTI) futures surged to around $74.50 as geopolitical tensions heightened concerns over oil supply. US military airstrikes on Iran-backed Houthi group in response to attacks on commercial oil shipments added to apprehensions, shaping the narrative of the oil market.

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