Traders remain cautious amid early Thursday as fears of the global economic jitters join mixed signals from China and clues about easy-money policy. Also keeping market players on the edge is the anxiety ahead of today’s top-tier data from the US and Germany.
It’s worth noting, however, that the US Dollar manages to defend the year-start recovery amid firmer yields and a lack of dovish tone from the FOMC Minutes while ignoring downbeat US JOLTS Job Openings.
Amid the firmer US Dollar, the price of Gold remains pressured at the lowest level in three weeks but the crude oil cheers a surprise draw in the US inventories and China PMI data. That said, Wall Street closed in the negative territory for the second consecutive day while the Asia-Pacific shares edged lower.
Elsewhere, EURUSD, USDJPY and AUDUSD bear the burden of the firmer Greenback while the GBPUSD recovered from a multi-day low before lacking upside momentum.
BTCUSD dropped the most in three weeks while the ETHUSD marked the heaviest fall since mid-August as the US SEC braces for talks with the industry players about the spot ETF commentaries.
Following are the latest moves of the key assets:
Although the Fed Minutes failed to defend policy hawks and the US data were mixed, fears of the global economic slowdown and unimpressive data/updates from the rest of the world allowed the US Dollar and yields to remain firmer of late.
As per the latest Federal Open Market Committee (FOMC) Meeting Minutes, the policymakers cited relief from the inflation risks while flagging concerns about the “overly restrictive” monetary policy. It’s worth noting that some among the decision-makers also preferred keeping the rates stable while also expecting a “soft landing” for the economy. Also, Richmond Fed President Thomas Barkin crossed wires early Wednesday and defended the US Dollar bulls while saying, “We're 'making real progress' on inflation while the economy is healthy.”
Talking about the data, the US ISM Manufacturing PMI rose to 47.4 for December from 46.7 prior and 47.1 market forecasts. However, the US JOLTS Job Openings eased to 8.79M compared to the previous addition of 8.852M and the market’s estimate of 8.85M.
Elsewhere, China’s Caixin Services PMI improved to 52.9 in December from 51.5 marked in November, as well as surpassing the market forecasts of 51.6. It should be noted that the global rating agency Fitch downgraded four Chinese National Asset Management Companies (AMCs) and put three on rating watch negative, which in turn renewed concerns about the dragon nation’s debt crisis and challenged the market’s optimism.
On a different page, Kitco News spotted figures from the British Mint to cite a record gold demand in 2023 while highlighting the hopes of witnessing more rate cuts from the major central banks. “The potential for central bank rate cuts in 2024 is boosting the gold and precious metals market, as the prospect of lower rates boosts demand for non-yielding assets,” said the news.
Apart from the China woes and hopes of more central bank rate cuts, chatter about the US strikes on Houthi bases in Yemen also contributed to the risk aversion and put a floor under the US Dollar despite concerns about the Fed’s rate cuts in 2024.
Further, Bank of Japan (BoJ) Governor Kazuo Ueda said that Japan's economy can balance rises in wages and & inflation, which in turn pushes back concerns favoring BoJ’s exit from ultra-easy monetary policy.
Moreover, the British Chambers of Commerce (BCC) released survey details suggesting the UK firms’ reluctance on capital investment. The findings were similar to the one shared earlier in the week by the UK’s Institute of Directors' (IoD) Confidence Index. The same prods the GBPUSD buyers ahead of the key US employment details.
On a different page, a huge draw in the US crude inventories, per the private survey data of the American Petroleum Institute (API), joined the geopolitical fears and upbeat China Caixin PMI data to trigger the Crude Oil’s recovery from a three-week low, mildly bid at the latest.
Moving forward, the early signal for Friday’s US Nonfarm Payrolls (NFP), namely the ADP Employment Change, for December will be closely observed for intraday directions. Also important will be the final readings of the UK Services PMI and first readings of German inflation data, as well as the US initial jobless claims and S&P Global Services PMI. The scheduled data will be observed for clues about the strength of the employment market and inflation pressure, which in turn can help the US Dollar in case of firmer US data and downbeat statistics elsewhere, especially when the Fed Minutes aren’t too dovish.
May the trading luck be with you!