Here’s everything you should know about Forex.
In Forex market The US Dollar (USD) maintains its lead across the board. While markets remain nervous due to China’s economic concerns and ongoing Middle East geopolitical tensions. China’s fourth-quarter Gross Domestic Product (GDP) revealed. That the economic recovery remains weak.
The world’s second-largest economy grew 5.2% year on year in the fourth quarter of 2024. Missing market expectations of 5.3% growth. On a quarterly basis, Chinese GDP lost impetus and increased 1.0% in Q4, as predicted. In December, China’s retail sales increased 7.4% year on year, falling short of the expected 8.0% growth. Industrial Production grew by 6.8% YoY in same period vs. 6.6% predicted.
On the geopolitical front, Iran-backed Houthi rebels launched an anti-ship ballistic missile at a US-owned cargo vessel off the coast of Yemen, putting investors on edge.
The US dollar is also supported by Governor Christopher Waller’s recent less dovish views. Waller reversed his previous stance on the dovish policy turn, saying on Tuesday that while inflation was approaching the central bank’s 2.0% target, the Fed should not hurry to slash interest rates until lower inflation could be firmly sustained.
According to the CME Group’s FedWatch tool, markets are currently pricing in a 62% probability of a rate cut by the Fed in March, down from 81% at the start. Of the week. The Greenback continues to benefit from reducing expectations on aggressive Fed rate reduction, courtesy of the hawkish Fed chorus.
Forex market movement in pairs.
However, the impending US Retail Sales data will hold the key to the USD’s next trip higher, as it may assist reprice the market’s expectations of Fed rate reduction this year.
The US Dollar Index is currently flirting with five-week highs above 103.50, despite a subdued rise in US Treasury bond yields. Meanwhile, US S&P 500 futures, a barometer of risk sentiment, are down 0.33% on the day, supporting the risk-off market trend.
Risk aversion is taking its toll on the Antipodeans within the G10 currency basket, as they continue their downward trend. AUDUSD is down 0.55% on the day to around 0.6550, while the NZD/USD is approaching 0.6100, down 0.30% so far.
USDJPY continues to rise, alongside the US Dollar, and is now approaching 148.00. The pair is up 0.47% today.
Despite the recent resistance from European Central Bank (ECB) officials against interest rate reduction, the EURUSD is trading close to over one-month lows near 1.0850. A mixed German ZEW survey adds to the Eurozone’s bleak economic picture, putting extra pressure on the euro. All eyes are focused on ECB President Christine Lagarde’s speech at the World Economic Forum’s (WEF) Annual Meeting in Davos.
GBPUSD is making a comeback to test 1.2650 after the headline UK annual CPI inflation surprised with an increase. In December, it rose to 4.0%, compared to an expected reduction of 3.8%.
The USDCAD is trading steadily over 1.3500, while the WTI oil price hovers around $72. The geopolitical developments around the Red Sea will continue to attract attention. Meanwhile, the Canadian dollar has reversed the hotter-than-expected Canadian CPI inflation-led comeback, casting doubt on the Bank of Canada’s (BoC) early rate-cutting bets.
The gold price has fallen to a weekly low of $2,020, extending the earlier slide on diminishing hopes of an aggressive Fed rate decrease.
