Daily Brief, January 20, 2023: The US Dollar Continues to Decline

The Dollar Nears its 7-Month Low, And the Yen is Declining

The US dollar hovered near seven-month lows on Friday as fears of an economic slowdown dampened risk appetite. At the same time, the yen weakened even as speculation mounted that the Bank of Japan would eventually abandon its ultra-loose monetary policy.

The dollar index, which measures the greenback’s performance against six major currencies, rose 0.098% to 102.12, not so far from a seven-month low of 101.51 it touched on Wednesday.

The index has fallen 1.3% this year after losing 7.7% in the last three months of 2022, as investors bet the Federal Reserve will slow the pace of interest rate hikes.

The Japanese yen fell 0.64% against the dollar to 129.26. Expectations that the Bank of Japan will end its policy of controlling bond yields have pushed the yen up 14% in the past three months.

The euro was stable, while the pound sterling recorded in the latest trading at $1.2372, down 0.14% during the day. The Australian dollar rose 0.17% against the US currency, to $0.692, while the New Zealand dollar rose 0.25%, to $0.641.

Gold is Heading Towards a Fifth Weekly Rise Amid Bets on Slowing Rate Hikes.

Gold prices stabilized on Friday, January 20, but are heading for gains for the fifth week in a row, as the dollar’s weakness and hopes of a slowdown in raising US interest rates reinforced the attractiveness of the yellow metal, which represents a haven. And by 03:08 GMT, gold settled in spot transactions at $ 1930.04 an ounce, up 0.5% during the week. Prices recorded yesterday, Thursday, $ 1935.20, the highest level since April 2022. US gold futures increased 0.4% to $ 1931.50.

The US Fed is expected to end the tightening cycle with a 25-basis point hike in each of the next two policy meetings, then likely to keep interest rates steady for at least the rest of the year. Lower interest rates mean lower returns from assets such as government bonds; Hence, investors may prefer gold.

Data on Wednesday showed US retail sales fell by the most in a year, putting the overall economy on a weaker growth path. The dollar index is heading for its second weekly decline, making gold cheaper for overseas buyers.

As for other precious metals, spot silver rose 0.5% to $23.94. Platinum fell 0.1% to $1,032.25, and palladium fell 0.3% to $1,748.28. Both metals are heading for a second week of decline.

Oil Records its Highest Settlement Price Since the Beginning of December.

Oil prices rose by about 1% at the settlement of Thursday, January 19th, amid increased Chinese demand, despite the unexpected increase in US inventories. Upon settlement, Brent crude futures rose by 1.4% to $86.16 a barrel. US crude futures also rose 1.1% to $80.33 a barrel upon settlement. These were the highest closing levels for both contracts since the beginning of last month.

The Joint Organizations Data Initiative (JODI) revealed that Chinese oil demand increased by about one million barrels per day every month to record 15.41 million barrels per day in November, which is the highest level since February. On the other hand, US Energy Information Administration data revealed an increase in oil stocks by about 8.4 million barrels, the most significant expansion since June 2021.

Netflix Added 7.66 million New Subscribers in the Fourth Quarter of 2022.

Netflix revealed its quarterly business results for the fourth quarter of 2022.

  • Earnings per share: 12 cents, versus Refinitiv’s forecast of 45 cents.
  • Revenue: $7.85 billion, according to projections.

The number of global subscribers to its paid service increased by 7.66 million new subscribers, compared to expectations for an increase of about 4.57 million.

The company’s profits from October to December reached $ 55 million, a decline compared to the same period in 2021 at $ 607 million.

Reed Hastings, co-founder, and CEO of Netflix has decided to step down from his position but will continue as chairman of the board. “Ted Sarandos” will remain co-CEO in his role and share the post with “Greg Peters,” who recently assumed the position of Chief Operating Officer of the company and will join the board of directors of Netflix.

US Indices Fell for the Third Consecutive Session, Pressured by Labor Market Data.

The Dow Jones lost 33,100 points, declining by more than 250 points, or about 0.8% of its value, by the end of Thursday’s session, and the S&P 500 index fell by 0.8% to close below 3,900 points. Both indices recorded a third daily decline in a row, while the Nasdaq Composite Index fell by about 1% to close below 10,900 points, down for the second consecutive session.

These declines came after the announcement of weekly jobless claims in the United States, which were less than expected. This renewed fears that the US Federal Reserve will continue its hawkish policy by raising interest rates due to the strong labor market.

The S&P 500 index witnessed a decline in 8 major sectors, led by the industrial sector, which fell by about 2%, while the energy sector led the gains by about 0.7%. On the technical level, all US indices closed below their 50-day moving average, indicating a possible decline in the short term.

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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Daily Market Brief 22-11-22
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