Macro Roundup (Jan 16)

Published: Jan 16, 2023 09:30 (GMT+8)
The U.S. dollar swayed on Friday, flirting with seven-month lows after a sharp dive overnight as data showed U.S. inflation was slowing, boosting hopes of the Federal Reserve taking its foot off an aggressive interest rate hike policy.

SHANGHAI, Jan 16 —This is a roundup of global macroeconomic news last Friday night and what is expected today.

The U.S. dollar swayed on Friday, flirting with seven-month lows after a sharp dive overnight as data showed U.S. inflation was slowing, boosting hopes of the Federal Reserve taking its foot off an aggressive interest rate hike policy.

The dollar index, which measures the U.S. currency against six others, rose 0.059% to 102.220 but was languishing around its lowest level since June.

The euro was up 0.03% to $1.0849, having touched fresh nine-month high earlier in the session. Sterling was last trading at $1.221, up 0.08% on the day.

U.S consumer prices surprisingly fell for the first time in more than 2-1/2 years in December, with Federal Reserve policymakers expressing their relief and paving the way for the central bank to slow the pace of monetary tightening.

Traders of futures tied to the Fed’s policy rate bet heavily on a downshift to quarter-percentage-point rises starting at the Jan. 31 to Feb. 1 meeting and a pause just below 5%, with interest rate cuts priced in for later in the year.

Stocks rose Friday as investors digested bank earnings and bet inflation would ease in 2023.

All of the major indexes fought their way into the green after beginning the day deep in the red. The Dow Jones Industrial Average rose 112.64 points, or 0.33%, to 34,302.61. The S&P 500 rose 0.40% to 3,999.09, and the Nasdaq Composite advanced 0.71% to 11,079.16.

The S&P and Nasdaq each posted their second consecutive positive week and best weekly performance since November. The tech-heavy Nasdaq was the outperformer for the week after rising 4.82%. The S&P advanced 2.67%, and the Dow added 2%.

Bank earnings weighed on equities to start the day, but sentiment reversed as investors appeared to shrug off negative news that was expected to some degree, according to Ross Mayfield, investment strategy analyst at Baird.

Oil prices settled more than a dollar a barrel higher on Friday, notching their biggest weekly gains since October, as the U.S. dollar dropped to a seven-month low and more indicators pointed toward growing demand from top oil importer China.

Brent crude futures settled at $85.28 a barrel, up by $1.25, or 1.5%. West Texas Intermediate (WTI) crude futures rose for the seventh-straight session to settle at $79.86 a barrel, up by $1.47, or 1.9%.

Brent gained 8.6% this week, while WTI rose by 8.4%, recouping most of the previous week’s losses.

Gold prices scaled an over nine-month peak on Friday, holding above the key pivot of $1,900 per ounce, as cooling U.S. inflation raised hopes for slower interest rate hikes from the Federal Reserve.

Spot gold rose 1.3% to $1,920.70 per ounce, the highest since end-April 2022. The metal has risen 2.9% so far this week.

U.S. gold futures settled up 1.2% at $1,921.7.

European markets closed higher Friday, building on gains from the previous session to notch their highest level since April 2022.

The pan-European Stoxx 600 closed up 0.5%, slightly paring earlier gains. Health care stocks added 1.4% to lead the rally while autos dropped 1.7%.

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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