Daily Brief, January 13,2023: Expects on 25bps Rate Hike Increase

US Inflation Resumes To Slow, Granting Way To Slack The Pace Of Rate Hikes

Fed fund futures are now fully expecting the Fed to raise interest rates by 25bps on its Feb. 1st meeting. The US core consumer price index (Core CPI) recorded a moderate increase in December, indicating that some price pressures have receded and clearing the way for the Federal Reserve to slow the pace of raising interest rates next month. Data released on Thursday showed that the consumer price index excluding food and energy rose 0.3% last month. Economists argue that this measure is a better indicator of core inflation than the overall measure. Overall CPI declined by 0.1% from November, the first drop in two and a half years, supported by lower energy costs. Thus, the index (CPI) recorded an increase of 6.5% from its level a year ago.

US Jobless Claims Live at A 15-Week Low.

US jobless claims fell to a 15-week low, while the labor market continues to show solidity in the face of the Federal Reserve’s endeavors to cool the economy. On Thursday, the US Department of Labor reported that the number of Americans filing for unemployment benefits for January 7 decreased by 1,000, from 206,000 to 205,000, in the previous week. The four-week moving average of orders, which smooths out some of the weekly volatility, fell by 1,750 to 212,500.

Unemployment claims are generally seen as an indicator of layoffs, which have been relatively low until the coronavirus pandemic caused millions of jobs to be lost in the spring of 2020. Policymakers are closely watching the US labor market at the Federal Reserve, which raised interest rates seven times last year in an attempt to revive the job market and lower high inflation. About 1.63 million people received unemployment benefits in the week that ended December 31.

US Dollar Dips to 9-months Low against Euro

The US dollar fell to its lowest level in nearly nine months against the euro Thursday, January 12, after US inflation data indicated that prices are on a sustainable downward trend. The data released supported the rising expectations of a slower pace of hikes in the Fed’s upcoming meeting in February. EUR/USD spiked to 1.0845, its weakest level against the single European currency since April 25. The dollar index fell in the latest trading 0.407% to 102.7, its lowest level since June 9. The dollar also dropped in the latest trading 1.75% against the yen to 130.2 yen per dollar. The Australian dollar rose 0.59% to $0.6947, and the New Zealand dollar rose 0.18% to $0.6378.

Gold Prices Breakthrough $1900/ounce

Gold prices jumped more than 1%, surpassing $ 1900/ounce levels, before paring its gains Thursday, January 12, following signs of a slowing down inflation in the US. By 14:47 GMT, spot gold was trading at $1886.19 an ounce after dropping from its highest levels since May 2022. Gold XAU/USD is currently trading at $1896.25/ounce. US gold futures rose 0.6% to $1889.50/ ounce at the time of writing.

As for other precious metals, silver rose 1.4% to $23.74/ounce after jumping 3% earlier. Palladium fell 1.2% to $1,752.18/ounce, while platinum fell 1.1% to $1,059.04/ounce.

Oil Rises More Than 1% Amid Optimism on Increased Demand

Oil prices rose more than 1% on Thursday, extending gains supported by optimism on the demand outlook in China. The largest oil importer is reopening its economy after severe restrictions on the most recent outbreak of the Coronavirus, which raises hopes for higher oil demand. Brent crude rose $1.36, or 1.7%, to settle at $84.03/ barrel. US crude rose 98 cents, or 1.3%, to $78.39/ barrel.

US Indices Rise for the Third Continuous Day

US indices recorded their third daily rise with the closing of Thursday’s session, supported by slowing inflation in the United States and expectations of less monetary tightening by the Federal Reserve in the coming period. The Dow Jones rose by more than 200 points, or 0.64%, recording its highest closing in a month and a half, to reach 34,190 points, while the S&P 500 rose by 0.3% after it reduced its gains by the end of the session, with its failure to breach the levels of 4,000 points, to reach 3,983 points. The Nasdaq Composite Index was able to close above 11,000 points, up by 0.64%.

Tesla Cuts Vehicles’ Prices

According to the automaker’s website, Tesla (TSLA.O) lowered pricing on its electric vehicles in the US and Europe, expanding a new aggressive discounting policy following the failure to meet Wall Street delivery expectations. This change is Tesla’s first significant action since Tom Zhu, its chief executive for China and Asia, was appointed to manage production and sales in the United States. Last week, Tesla reduced its prices in China and other Asian regions. Price reductions for Tesla are also in effect in Singapore, Australia, South Korea, and Japan.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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