Euro rose in European trade on Friday against a basket of major rivals, resuming gains against the dollar after a short hiatus and trading near a week high, and about to mark the first weekly profit in a month after hot inflation data from Spain and Germany.
The data reduced the odds of a 0.25% European Central Bank interest rate in December, with investors now waiting for the whole eurozone inflation today.
The Price
The EUR/USD rose 0.25% today to $1.0576, with a session-low at $1.0548.
The euro closed down 0.1% on Thursday against the dollar on profit-taking away from a week high at $1.0587.
Weekly Trades
Euro is up 1.55% so far this week against the dollar, about to mark the first weekly profit in a month.
Spanish and German Inflation
Earlier data showed Spain’s consumer prices rose 2.4% in November, up from 1.8% in October.
Germany’s consumer prices rose 2.2% in November, up from 2.0% in October.
The renewed inflationary pressures could convince the European Central Bank to reduce the pace of policy easing and interest rate cuts.
European Central Bank executive member Isabel Schnabel told Bloomberg on Wednesday that interest rate cuts should be gradual and move to a neutral position.
Following the remarks, the odds of a 0.25% interest rate cut by the ECB in December tumbled from 90% to 55%.
Now investors await inflation data for the whole eurozone, expected at 2.3% in November, up from 2.0% in October.
Yen rallied in Asian trade on Friday to a five-week high against the US dollar, resuming strong gains and holding its ground above 150 yen per dollar, and about to mark the biggest weekly profit since July on hot inflation data.
The data showcased the increasing pressures on the Bank of Japan’s policymakers, which boosted the odds of a third Japanese interest rate hike this year in December.
The gains are also boosted by a drop in US 10-year treasury yields as the odds of a 0.25% Federal Reserve interest rate cut in December grew.
The Price
The USD/JPY pair fell 1.15% today to 149.76 yen per dollar, with a session-high at 151.55.
The yen lost 0.3% yesterday against the dollar, the first loss in four sessions on profit-taking.
Weekly Trading
Across this week, the yen is up an excellent 3.25% so far against the dollar, about to mark the first weekly profit in three weeks, and the largest since late July.
Tokyo Inflation
Recent inflation data from Tokyo showed prices rose 2.2% y/y in November, marking the sharpest increase in three months, and passing estimates of 2.0%.
The data heaps inflationary pressure on the Bank of Japan’s policymakers and will potentially lead to another rate hike in December.
Japanese Rates
Following the data, the odds of a 0.25% BOJ interest rate hike at the December 19 meeting stood at 60%.
US Yields
US 10-year treasury yields fell 0.4% on Friday and almost hit a four-week trough at 4.227%, pressuring the greenback.
The Fed’s latest meeting minutes showed many policymakers supporting a gradual pace of interest rate cuts.
According to the Fedwatch tool, the odds of a 0.25% interest rate cut in December stood at 67%.
A reduced long-term yield gap between the US and Japan would boost the yen’s appeal against the greenback and other major rivals.
US stock and bond markets were closed for Thanksgiving today and will resume work in a truncated session tomorrow.
Recent government data showed US GDP growth clocked in at 2.8% in the third quarter of 2024, same as expectations, and down from 3% in the second quarter.
US durable goods orders rose 0.2% in October, below estimates of 0.7%, and slowing down from 0.7% in September.
US unemployment claims were unchanged at 213 thousand in the week ending November 23, below expectations of 215 thousand.
According to the Fedwatch tool, the odds of a 0.25% Federal Reserve interest rate cut stood at 69.7% in December, up from 59% a day ago.
Global oil prices rose in American trade on Thursday for the first time in four sessions away from one-week lows after US crude stocks fell according to official EIA data.
The OPEC+ alliance is convening in the weekend to discuss latest market developments, amid expectations it’ll delay scheduled production hikes in January to help stabilize prices.
Prices
US crude rose 0.75% today to $69.25 a barrel, with a session-low at $68.30.
Brent rose 0.8% to $72.92 a barrel, with a session-low at $71.89.
On Wednesday, US crude lost 0.3%, the third loss in a row, approaching a week low at $68.07, while Brent shed 0.2%, approaching November 18 lows at $71.66.
US Stocks
The Energy Information Administration reported a drawdown of 1.8 million barrels last week to 428.4 million barrels, while analysts expected a drop of 0.5 million barrels.
Gasoline stocks rose by 3.3 million barrels to 212.2 million barrels, as distillate stocks rose by 0.4 million barrels to 114.7 million barrels.
US Output
US crude output rose by 300 thousand bpd to a total of 13.5 million bpd, a record high.
OPEC+
The OPEC+ alliance is convening in the weekend to discuss the latest market developments, and is highly expected to delay a scheduled production hike in January.
The group is likely to issue a semi-unanimous call to delay the unwinding of voluntary production cuts amounting to 2.2 million bpd until the first quarter of 2025, in order to support prices.