Dollar extends recovery ahead of US consumer spending data
Dollar rose in European trade against a basket of major rivals off eight-month lows for the second session, after strong US growth and unemployment data.
The gains come ahead of US consumer spending data for December, important for gauging inflation in the country.
The Dollar Index
The index rose 0.3% to 102.03, with a session-low at 101.68, after rising 0.2% yesterday, the first profit in three days off eight-month lows at 101.50.
The dollar rose as well after data showed US economy grew in the fourth quarter more than expected, while unemployment claims hit nine-month lows.
Spending Data
Investors await important US consumer spending data for December, important for gauging inflation and the pace of policy tightening this year by the Fed.
US consumer spending is expecting up 5.1% in December, slowing down from 5.5%, while expected up 0.2% on a monthly basis compared to a 0.1% rise in November.
Strong data will bolster the case for an extended policy tightening and multiple more rates hikes this year, in turn pressuring gold prices.
Will The Dollar Sustain More Losses in 2023?
If the stream of data continued to show slower inflation and weaker prices in the US, it's expected the Fed will end its cycle of rate hikes, in turn hurting the greenback.
Gold declines for second session after US data
Gold prices fell in European trade for a second session off nine-month highs on profit-taking while dollar regained ground.
Dollar rebounded from recent lows after strong US data that bolstered the case for multiple Fed rate hikes this year.
Now investors await important US data on consumer spending later today to gauge the pace of policy tightening this year.
Gold Prices Today
Gold prices fell 0.45% to $1,919 an ounce, after losing 0.9% yesterday on profit-taking away from nine-month highs at $1,949.
The Dollar
The dollar index rose 0.2% on Friday for the second session off eight-month lows at 101.50 against a basket of major rivals.
Recent data showed US economy grew in the fourth quarter more than expected, while unemployment claims hit nine-month lows.
Spending Data
Investors await important US consumer spending data for December, important for gauging inflation and the pace of policy tightening this year by the Fed.
Strong data will bolster the case for an extended policy tightening and multiple more rates hikes this year, in turn pressuring gold prices.
The SPDR
Gold holdings at the SPDR Gold Trust remained flat yesterday at 919.37 tones, the highest since October 31.
Would Gold Prices Pierce $2,000 in 2023?
Many analysts expect gold prices to extend gains beyond $2,000 for the first time since March 2022 amid active expectations the Fed will end the cycle of rate hikes in the first half of the year.
Euro backs off nine-month high on profit-taking
Euro fell in European trade on Friday against dollar for a second session off nine-month highs on profit-taking.
Euro is heading for the third weekly profit in a row on prospects of a 0.5% rate hike by the ECB at both the February and March meetings.
EUR/USD fell 0.25% to 1.0865, with a session-high at 1.0900, after falling 0.2% yesterday, the first loss in seven days on profit-taking away from nine-month highs at 1.0929.
Dollar also rebounded from multi-month lows after positive US data, which bolstered the case for multiple more rate hikes.
Euro is up 0.25% so far this week against dollar on track for the third weekly profit in a row.
ECB
ECB President Christine Lagarde said recently that inflation remains too high and the bank is committed to continuously increase interest rates until inflation is brought back to 2%.
Lagarde once again repeated the use of the phrase "staying the course" when talking about interest rate decisions at upcoming meetings, meaning the current pace will be maintained at least until the second quarter of the year.
Other ECB members strongly hinted at multiple 0.5% rate hikes in both February and March.
The Dollar
The dollar index rose 0.2% on Friday for the second session off eight-month lows at 101.50 against a basket of major rivals.
Recent data showed US economy grew in the fourth quarter more than expected, while unemployment claims hit nine-month lows.
Estimates
Despite euro's current decline, analysts still expect euro to gain ground above $1.1 in the short term, as the ECB prepares to increase interest rates by double the Fed's rate in February.
Wall Street climbs after positive data
US stock indices climbed on Thursday after strong data that showed continued growth in the world's largest economy.
US economy grew 2.9% in the fourth quarter of 2022, beating estimates of 2.6%, while up from 3.2% in the third quarter.
US durable goods orders rose 5.6% in November, beating estimates of 2.4%, and improving from October's 2.1% decline.
US unemployment claims tumbled to 181 thousand in the week ending January 21, the slowest since last April, and below estimates of 203 thousand, while also down from 192 thousand in the previous reading.
Such data indicate the strength and vitality of the economy, which is reflected in recent statements by the IMF expecting the US recession to avoid recession this year.
Dow Jones rose 0.3%, or 100 points as of 15:34 GMT to 33,844, while S&P 500 rose 0.7%, or 26 points to 4,043, as NASDAQ added 1.1%, or 130 points to 11,442.