Macro Roundup (Jan 13)

SHANGHAI, Jan 13 —This is a roundup of global macroeconomic news last night and what is expected today.

The dollar tumbled to a nearly nine-month low against the euro on Thursday after data showed U.S. inflation was easing, prompting bets that the Federal Reserve will be less aggressive with rate hikes going forward.

The move lower in the dollar came as the Japanese yen surged, hitting a more than six-month high against the greenback, on a report that the Bank of Japan may take further steps to address the side effects of monetary easing.

U.S. data showed the consumer price index (CPI) dipped 0.1% last month, marking the first decline in the data since May 2020, when the economy was reeling from the first wave of COVID-19 infections.

Price pressures are subsiding as the U.S. central bank’s fastest monetary policy tightening cycle since the 1980s dampens demand, and bottlenecks in the supply chains ease.

Fed policymakers expressed relief that price pressures were easing, paving the way for a possible slowdown in interest rate hikes, but they signaled the central bank’s target rate was still likely to rise above 5% and stay there for some time despite market bets to the contrary.

Following the CPI report, the dollar plunged as much as 1% against the euro, its weakest versus the common currency since April 21.

Stock futures were flat in overnight trading Thursday as investors braced for big bank earnings to commence.

Futures tied to the Dow Jones Industrial Average and S&P 500 were flat, while Nasdaq 100 futures dipped 0.10%.

The overnight moves followed a positive day for the three major indexes. The Nasdaq Composite snatched its fifth day of gains — a first since July. Stocks rose broadly as December’s CPI report showed prices declined 0.1% over November. While prices rose at a 6.5% pace compared to the previous year, the results heightened hopes that the Federal Reserve may soon slow its hiking.

The Dow Jones Industrial Average added 216.96 points, or 0.64%. The S&P 500 and Nasdaq Composite gained 0.34% and 0.64%, respectively, during regular trading.

Oil prices gained about $1 a barrel on Thursday, supported by figures showing U.S consumer prices unexpectedly fell in December and by optimism over China’s demand outlook.

The U.S. consumer price index dipped 0.1%, suggesting inflation was now on a sustained downward trend. Top oil importer China is reopening its economy after the end of strict COVID-19 curbs, boosting hopes of higher oil demand.

Brent crude settled at $84.03 a barrel, rising $1.36, or 1.7%. U.S. West Texas Intermediate crude settled at $78.39 a barrel, gaining 98 cents, or 1.3%.

Gold prices rose over 1%, hovering near the $1,900 per ounce pivot on Thursday after data showing signs of cooling inflation in the United States boosted bets for slower rate hikes from the Federal Reserve.

U.S. consumer prices grew 6.5% on an annual basis in December, in line with expectations, after a 7.1% rise last month. Core inflation was in line with expectations as well.

Spot gold jumped 1.1% to $1,896.30 per ounce by 2:40 p.m. ET (1940 GMT). It earlier hit $1,901.4, its highest since May.

U.S. gold futures settled up 1.1% at $1,898.8.

European markets on Thursday closed at their highest level since April 2022, despite a choppy afternoon following the release of U.S. inflation data.

The pan-European Stoxx 600 index provisionally closed 0.7% higher, with most sectors and major bourses in positive territory.