What you need to know on Friday, January 14:
The market stabilized, with the dollar consolidating losses on Thursday. Risk appetite waned, preventing the dollar from falling further. Intraday gains in the greenback helped correct oversold conditions reached after Wednesday’s selloff.
The aggressive attitude of the Federal Reserve was appreciated well before the release of the US inflation figures, with three rate hikes anticipated for this year and possibilities for a second round of the balance sheet before the end of the year, which which resulted in the report unleashing the opposite of the usual reaction to skyrocketing price pressure.
GBP / USD extended gains to 1.3748, a new two-month high, to end the day with modest gains around 1.3715. The pound ignores headlines that show the post of UK Prime Minister Boris Johnson at risk amid the breaking of lockdown rules last year. Furthermore, Brexit keeps coming to the front line, with UK Trade Minister Truss stating that the UK hopes to have a deal with the trans-Pacific association Trade Bloc in the coming years.
The EUR / USD pair reached 1.1481, ending the day around 1.1460. The vice president of the European Central Bank, Luis de Guindos, said that the European economy is getting used to the coronavirus, adding that “inflation may not be as transitory as it was forecast just a few months ago”, although he expects it to remain below the ECB target in 2023 and 2024.
Commodity currencies ended the day little changed. AUD / USD is trading around 0.7290, while USD / CAD is at 1.2490.
The USD / JPY pair extended its decline and is currently flirting with the 114.00 level.
Spot gold declined modestly, currently trading at around $ 1,820 a troy ounce, while crude prices were affected by the soft tone of stocks. The WTI closed at $ 81.70 a barrel.
Yields on US government bonds rose, but could not hold the gains, and ended the day only slightly higher. Wall Street, on the other hand, was unable to extend its gains, and most indices posted modest intraday losses.
Friday will be quite a busy day as the UK will release its November Gross Domestic Product and Manufacturing Production for the same month, while the US will provide December Retail Sales and the preliminary estimate of the Consumer Sentiment Index. Michigan January