Markets await US CPI

Geopolitical risks and a weaker US Dollar lent partial support for safe heavens ahead of the crucial US CPI data

By Farah Mourad | 15 January 2025

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Market open
  • EUR/USD traded steadily around 1.0300

  • USD/JPY dropped below 157.50

  • WTI crude hovered near $76.75

Markets retreated on Tuesday as caution dominated ahead of the highly anticipated Consumer Price Index (CPI) report scheduled for today. This cautious sentiment persisted despite a surprising cooling in wholesale prices, reflected in the latest Producer Price Index (PPI) data, which provided a brief but limited boost to investor confidence.

Currencies

USD/JPY
The Japanese Yen gained momentum as USD/JPY slid below 157.50 during the early European session on Wednesday. The pair retreated from the 158.00 zone after comments from Bank of Japan Governor Kazuo Ueda hinted at the possibility of a rate hike in the upcoming meeting. Meanwhile, the US Dollar struggled for direction as traders awaited the pivotal US Consumer Price Index (CPI) data release.

EUR/USD
The Euro held firm against the Dollar, with EUR/USD trading around 1.0300 in Asian hours. The currency pair found support amid reports suggesting improved market sentiment tied to potential gradual tariff adjustments by the incoming US administration. However, the pair’s movement remained tempered by broader uncertainties in the Eurozone as European Central Bank (ECB) policymakers signaled possible easing measures to counter the region’s fragile economic conditions.

Commodities


Gold prices experienced selling pressure during Wednesday's Asian session, erasing part of the previous day's modest recovery. A stronger risk appetite, driven by diminished fears of trade disruptions under the new US administration and softer-than-expected inflation data, weighed on demand for the safe-haven asset. Nonetheless, geopolitical uncertainties and the US Dollar's weakness near weekly lows offered some underlying support for the yellow metal. Investors now turn to the US CPI report for further direction.


Silver prices edged lower, reflecting the broader risk-on sentiment in the markets. Industrial demand prospects for Silver gained traction following China's recent economic stimulus efforts, potentially limiting further declines.


West Texas Intermediate (WTI) crude held steady near $76.75 on Wednesday. Oil prices rose modestly as fresh US sanctions targeting Russian exports raised concerns over tightening global supplies. However, gains were capped by a US government agency’s projection of stable domestic oil demand in the coming years, which tempered bullish sentiment.

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