Dollar edges up after inflation data
Dollar rose against most major rivals on Thursday following US inflation data, which could have an impact on Fed monetary policies.
The data released earlier today showed US personal spending rose 0.3% in January m/m, and 2.4% y/y, slowing down slightly from December.
Core spending rose 0.4% m/m in January, and 2.8% y/y, also slowing from December.
Such data showed that inflation is ever so slightly losing steam in accordance with Fed’s plans.
On the other hand, US labor data showed unemployment claims rose 13 thousand to 215 thousand in the week ending February 24.
Following the collective data, US two-year treasury yields fell by 3 basis points to 4.619%, while 10-year yields fell by 4 basis points to 4.232%.
The dollar index rose 0.1% as of 21:28 GMT to 104.1, with a session-high at 104.2, and a low at 103.6.
Loonie
The Canadian dollar stabilized at 0.7364 as of 21:43 GMT.
Earlier government data showed Canada’s GDPgrowth flat in December, while analysts expected a 0.2% growth rate.
Aussie
The Australian dollar stabilized at 0.6499 against its US counterpart as of 21:43 GMT.
Most US stock indices gain ground after inflation data
Most US stock indices rose on Thursday following US data that showed inflation has slowed down.
The data released earlier today showed US personal spending rose 0.3% in January m/m, and 2.4% y/y, slowing down slightly from December.
Core spending rose 0.4% m/m in January, and 2.8% y/y, also slowing from December.
Such data showed that inflation is ever so slightly losing steam in accordance with Fed’s plans.
On the other hand, US labor data showed unemployment claims rose 13 thousand to 215 thousand in the week ending February 24.
Following the collective data, US two-year treasury yields fell by 3 basis points to 4.619%, while 10-year yields fell by 4 basis points to 4.232%.
Dow Jones fell 0.2%, or 78 points as of 17:39 GMT to 38,871, while S&P 500 rose 0.1%, or 5 points to 5,075, as NASDAQ added 0.3%, or 44 points to 15,993.
Oil hovers near three-week high, while still facing negative pressures
Global oil prices rose in European trade on Thursday, with US crude resuming gains after a hiatus, while Brent gained ground for the first time in three days amid continued pressure on prices
Traders are concerned about US oversupply after commercial crude stocks rose for the fifth straight week, while US production remains at record high.
Now traders await important US personal spending data later today, which will provide important clues on the future of US rates.
Global Prices
US crude rose 0.65% to $78.66 a barrel, while Brent added 0.45% to $82.18 a barrel.
US crude lost 0.3% on Wednesday, the first loss in three days on profit-taking away from three-month highs at $79.58, while Brent slipped 0.6%.
US Stocks
The Energy Information Administration reported a buildup of 4.2 million barrels in US crude stocks last week to 447.2 million barrels, while analysts expected a buildup of 3.1 million barrels.
Gasoline stocks fell 2.8 million barrels to 244.2 million barrels, while distillate stocks fell 0.5 million barrels to 121.1 million barrels.
US Production
The EIA reported no change in US crude stocks at 13.3 million barrels for the third straight week, already a record high.
The EIA doesn’t expect US production to surpass that upper ceiling until February 2025.
US Personal Spending Data
Now investors await important US personal spending data, the Fed’s favorite measure of inflation to gauge the likely path ahead for policies.
Investors already cut their forecasts for early US interest rate cuts this year following a spate of strong consumer and producer prices data.
It’s now expected the Fed will start cutting interest rates in June, instead of March as expected before.
Gold hovers near two-week high ahead of US spending data
Gold prices rose in European trade on Thursday, maintaining gains for the third straight session and hovering near two-week highs after US GDP growth data.
The data was slightly below estimates, and somewhat boosted the chances of early Fed rate cuts in the first half of the year, with investors now awaiting important US consumer spending data later today.
Spending data is the Federal Reserve’s favorite inflation gauge, thus it’ll prove crucial to forecasts about future interest rates.
Gold Prices Today
Gold prices rose 0.2% to $2,037 an ounce, with a session-low at $2,034, after closing up 0.25% yesterday, approaching a two-week high at $2,041.
The Dollar
The dollar index fell 0.15% on Thursday against a basket of major rivals, underpinning gold and other dollar-denominated metals.
The decline came after government data showed US GDP growth at 3.2% in the fourth quarter of last year, below estimates of 3.3%.
US Rates
Following the data, the odds of a 0.25% Fed interest rate cut in March barely rose to 2.5%, and the odds for a May cut stood at 23%, and the odds for a June cut stood at 62%.
Investors now expect 75 basis points of total US rate cuts this year, down from 150 basis points in previous forecasts.
US Consumer Spending
Now investors await important US personal spending data in January, crucial for gauging the likely path ahead for policies.
The SPDR
Gold holdings at the SPDR Gold Trust fell 1.44 tonnes yesterday to a total of 825.5 tonnes, the lowest since July 2019.