The Fact That The USD is Soon To Expire Does Not Bode Well For The Currency
What you need to take care of on 12/01/2023
For the second day in a row, market participants held their breath, with key pairs remaining at familiar levels. Tensions rose ahead of the December US Consumer Price Index (CPI), with the spotlight on central bank officials.
The European Central Bank (ECB) policymakers were mainly hawkish, which supported the EUR. Francois Villeroy de Galhau, governor of the French central bank, stated that the ECB should seek to reach the terminal rate by the summer, signaling that rates would have to be raised further in the following months.
Austria's central bank governor, Robert Holzmann, took a more aggressive position, stating that "rates will need to climb much higher to achieve levels that are sufficiently restrictive to enable a rapid return of inflation to goal."
Finally, he stated that it is too early to contemplate a potential terminal rate. Finally, ECB Governing Council member Olli Rehn stated that interest rates in the Eurozone will need to climb further in the next sessions and reach restrictive levels to reduce inflation.
Susan Collins, the Boston representative of the US Federal Reserve, backed modest rate rises. Collins stated that she believes a 25 basis point or 50 basis point increase would be appropriate, adding that she is leaning toward a 25 basis point increase at this time, but that it is extremely data-dependent.
The Kremlin reiterated that President Vladimir Putin is willing to engage in Ukraine, but that any agreement should be on Russian terms. A peaceful resolution to the crisis is still a long way off.
EUR/USD remains constant at 1.0750 for the second day in a row, while GBP/USD finished at 1.2140. The AUD/USD pair began the day on the back foot, but recovered and achieved a slight gain, trading just over the 0.6900 mark. The USD/CAD pair is trading around 1.3420, while the USD/JPY pair is at 132.40.
Gold reached a new eight-month high of $1,886.63 per troy ounce before reversing course ahead of Wall Street's opening, finishing the day with minor gains at approximately $1,877.00.
Crude oil prices rose on the back of a study from the US Energy Information Administration (EIA), which predicted that worldwide use of liquid fuels such as gasoline, diesel, and jet fuel would reach new highs in 2024. The headline concealed a significant increase in US stocks.
On Thursday, the focus will be on the US Consumer Price Index, which is expected to rise 6.5% year on year in December. The core reading is up 5.7%, down from 6% previously.