Markets stay relatively quiet early Monday as investors move to the sidelines to gear up for critical central bank policy announcements later in the week. Following the modest recovery witnessed in the second half of the previous week, the US Dollar Index continues to fluctuate in a tight channel at around 102.00. The benchmark 10-year US Treasury bond yield holds steady near 3.5% and US stock index futures trade modestly lower on the day. Business and consumer sentiment data from the Eurozone and German Gross Domestic (GDP) figures will be looked upon for fresh impetus later in the session. The US economic docket will feature the Federal Reserve Bank of Dallas’ Texas Manufacturing Survey.
The data published by the US Bureau of Economic Analysis revealed on Friday that the annual Core Personal Consumption Expenditures (PCE) Price Index declined to 4.4% in December from 4.7% in November. This reading came in line with the market expectation and failed to trigger a significant market reaction.
Meanwhile, the Shanghai Composite Index opened modestly higher following a long break and was last seen clinging to small daily gains. On a negative note, Hong Kong’s Hang Seng Index is down more than 2% on a daily basis. China’s Center for Disease Control and Prevention (CDC) recently noted that the current wave of COVID-19 infections was nearing an end and added that there was no significant rebound in cases during the Lunar New Year holiday.
EUR/USD closed the previous week virtually unchanged slightly below 1.0900. Although the pair edged slightly higher in the early trading hours of the Asian session, it is having a difficult time gathering directional momentum. German economy is forecast to post an annualized growth of 1.1% in the fourth quarter.
GBP/USD struggled to make a decisive move in either direction ahead of the weekend and ended the week flat below 1.2400. In the early European session, the pair extends its sideways grind. While speaking on Friday, UK Chancellor of the Exchequer, Jeremy Hunt, said that the best tax cut would be a “cut in inflation.”
USD/JPY fell sharply toward 129.00 during the Asian trading hours on Monday before recovering to the 129.50 area. Reuters reported earlier that a panel of academics and business executives urged the Bank of Japan (BoJ) to make its 2% inflation target a long-term goal. The proposal reportedly also included the need to have interest rates rise more in line with economic fundamentals and normalize Japan’s bond market function. In the meantime, “I believe it’s possible to achieve 2% inflation target, accompanied by wage growth, by continuing current easy policy,” BoJ Governor Haruhiko Kuroda reiterated earlier in the day.
Gold price staged a downward correction and erased its weekly gains in the second half of the week. At the time of press, XAU/USD was posting small daily gains at around $1,930.
Following a three-day consolidation phase, Bitcoin gained traction and advanced toward $24,000 on Sunday. As of writing, BTC/USD was moving sideways near $23,700. Ethereum rose nearly 5% on Sunday and ended up posting small weekly gains. ETH/USD seems to have gone under modest bearish pressure early Monday and was last seen losing nearly 1% on the day at $1,630.