Understanding Eurozone CPI and GBP Movements: What’s Next?
Tuesday kicks off with Eurozone CPI figures and retail sales data from the UK, setting the tone for UK markets. Later, US ISM Services data and Canadian PMI are expected to bring further market direction. Commodity prices remain steady, while currency pairs reflect cautious optimism.
Key Data Out Today
- UK Retail Sales (YoY, Dec): Up 3.1%, exceeding the forecast of 2.3%, signaling resilience in consumer spending.
- Eurozone CPI (MoM, Dec): Awaiting data, expected at -0.3%, reflecting seasonal price adjustments.
- Eurozone CPI (YoY, Dec): Expected at 2.4%, matching the previous reading, keeping inflation concerns alive.
- Eurozone Unemployment Rate (Nov): Forecasted at 6.4%, with limited change expected.
- US ISM Services PMI (Dec): Market anticipates a print of 53, pointing towards expansion in the services sector.
- Canadian PMI (Dec): Expected at 55.4, signaling continued business optimism.
Energy:
- Crude Oil: WTI at $73.22, down 0.47%, as demand forecasts stabilize.
- Brent: At $76.03, down 0.35%, reflecting a balanced supply outlook.
- Natural Gas: Slid 3.91% to $3.53/MMBtu amid milder weather forecasts in Europe.
Metals:
- Silver: Gained 0.90% to $30.20/oz, tracking gold’s rise and strong industrial demand.
- Gold: Up 0.24% to $2640.87/oz, supported by a weaker dollar.
Currency Movements
EUR/USD
- EUR/USD: The euro has appreciated by 0.39% against the U.S. dollar, reaching 1.04308. This uptick is partly due to discussions surrounding potential U.S. tariffs, which have impacted dollar strength.
GBP/USD
- GBP/USD: The British pound has risen by 0.43% to 1.25712. Despite a 1.4% annual decline in 2024, the pound ended the year as the best-performing major currency against the dollar. This was supported by closely aligned UK and US bond yields.
AUD/USD – NZD/USD
AUD/USD and NZD/USD: The Australian and New Zealand dollars have gained 0.61% and 0.88% respectively against the U.S. dollar, with AUD/USD at 0.62843 and NZD/USD at 0.56894. These gains are influenced by commodity market trends and investor sentiment.
USD/JPY
- USD/JPY: The U.S. dollar has slightly decreased by 0.10% against the Japanese yen, trading at 157.462. The yen remains near five-month lows, influenced by rising U.S. Treasury yields and the Bank of Japan’s cautious stance on interest rate adjustments.
USD/CNY
- USD/CNY: The dollar has declined by 0.20% against the Chinese yuan, standing at 7.33149. Recent actions by China’s central bank include warnings to mutual funds against aggressive bond purchases. These measures aim to prevent a bond market bubble and manage currency depreciation.
USD/CHF
- USD/CHF: The U.S. dollar has fallen by 0.19% against the Swiss franc, now at 0.90297. This movement reflects a broader softening of the dollar amid ongoing global economic discussions.
USD/CAD
- USD/CAD: The dollar has decreased by 0.17% against the Canadian dollar, trading at 1.43083. The Canadian dollar’s performance is closely tied to crude oil prices, which have seen recent fluctuations.
USD/MXN
- USD/MXN: The U.S. dollar has slightly decreased by 0.07% against the Mexican peso, standing at 20.3057. The peso’s resilience is notable amid discussions of U.S. trade policies.
USD/INR
- USD/INR: The dollar has seen a marginal decline of 0.02% against the Indian rupee, now at 85.7177. This stability reflects balanced market conditions in emerging economies.
Things to Keep an Eye On
- Eurozone CPI Data: Inflation metrics will be key in shaping ECB policy expectations.
- US ISM Services PMI: Traders will assess if the US services sector continues expanding.
- Canadian PMI: Business sentiment data will impact the CAD’s direction.
- Energy Market Trends: Weakness in natural gas prices may impact broader commodity markets.