
Markets Update: Dollar falls to a one-month low against the yen due to dovish Fed and hawkish BOJ. Japan's Nikkei lags behind the region as a strong currency impacts performance. Investors remain cautious before Trump's inauguration on Monday.
Global Markets Roundup: 17 January 2025
FESX1! | Z1! | NI225 | NQ1! | ES1! | EURUSD | USDJPY | DXY | GOLD | CL1! | ZC1! | ZS1! HG1!
Global stocks experienced a slight rise on Friday, bolstered by unexpectedly robust growth in China's economy at the end of the previous year. However, the gains were restrained due to caution ahead of Donald Trump's inauguration as the U.S. president next week.
Asian Markets
Japanese equities faced challenges, with the Nikkei poised for a third consecutive losing week. This was attributed to the yen reaching a one-month high, driven by increasing bets on an imminent Bank of Japan rate hike. Despite the struggles, Japan's Nikkei index NI225 managed to reduce earlier losses, ultimately falling by 0.31%. In China, the economy grew by 5% last year, aligning with the government's target. Nevertheless, this growth was uneven, with many citizens reporting deteriorating living standards as Beijing struggled to shift its industrial and export gains to consumers. Mainland Chinese blue chips 3399300 rose by 0.47% as of 0632 GMT, while Hong Kong's Hang Seng index HSI gained 0.29%. The Chinese yuan USDCNH remained flat at 7.3423 per dollar in offshore trading.
Global Indices
MSCI's world index EURONEXT:IACWI edged down by 0.05%, while its broadest index of Asia-Pacific shares (.MIAP00000PUS) lost 0.17%. European stock futures indicated a positive outlook, especially in Britain, where FTSE futures Z1! climbed by 0.47%. Pan-European STOXX 50 futures FESX1! also edged up by 0.04%.
U.S. Markets
U.S. S&P 500 futures ES1! gained 0.15% after the cash index closed down 0.2% overnight. These minor declines followed a significant 1.8% jump on Wednesday, which was the largest daily percentage gain since the post-election rally on November 6. This surge was fueled by strong bank earnings at the commencement of the new reporting season.
Â
Currency Movements
The yen USDJPY had initially climbed to its highest level since December 19 at 154.98 per dollar, before reversing course to trade approximately 0.4% lower at 155.69. The dollar recovered some of the significant losses it suffered on Thursday against major currencies, driven by renewed expectations of a Federal Reserve rate cut by June. The dollar index DXY, which measures the U.S. dollar against a basket of six major currencies, including the yen, increased by 0.14% to 109.12. However, it remains 0.47% lower for the week, potentially ending a streak of six consecutive weeks of gains. The euro EURUSD declined by 0.13% to $1.02875, while the British pound (GBPUSD) decreased by 0.21% to $1.2213. Decreases in bond yields provided support for alternative assets. Bitcoin (BTCUSD) rose to $102,050.99, its highest level since January 7.
Â
Treasury Yields
Ten-year U.S. Treasury yields (US10Y) stood at 4.6148% in the latest session, following a decline to the lowest level since January 6 at 4.5880% on Thursday. This decrease occurred after Fed Governor Christopher Waller indicated that three or four interest rate cuts this year remain a possibility, contingent upon weakening U.S. economic data. Ten-year Japanese government bond yields (JP10YTN=JBTC) decreased in conjunction with overnight movements in U.S. Treasuries. Comments from BOJ Governor Kazuo Ueda and Deputy Governor Ryozo Himino this week fostered expectations of a 78% likelihood of a quarter-point rate hike on January 24. They expressed confidence that wage growth would likely remain robust this year, contributing to Japan's progress towards sustainably achieving its inflation target.
Commodities
Gold (GOLD) stood at $2,712.36, remaining close to Thursday's peak of $2,724.55, which marked its strongest level in over a month. Meanwhile, crude oil prices were on track for a fourth consecutive weekly gain due to recent U.S. sanctions on Russian energy trade, which constrained supply and drove up spot prices and shipping rates. Brent crude futures (BRN1!) increased by 0.44% to $81.65 per barrel, poised for a 1.9% rise for the week. U.S. West Texas Intermediate crude futures (CL1!) advanced by 0.67% to $79.21 per barrel, aiming for a 2.76% increase for the week.
Soft Commodities
Soybean futures increased during the day but remained stable for the week as Brazil's substantial harvest progressed and a soyoil rally lost momentum. Wheat prices rose and were on track for a weekly gain, following in corn's trend, though weak demand kept prices near 2024 lows. The most active corn contract on the Chicago Board of Trade (CBOT) ZC1! rose by 0.6% to $4.77-1/2 per bushel by 0314 GMT, showing a 1.5% increase for the week. CBOT soybeans ZS1! gained 0.7% to $10.25-3/4 per bushel, while wheat ZW1! climbed 0.3% to $5.39-1/4 per bushel. Earlier in the week, corn reached its highest level since December 2023, and soybeans hit a three-month high following the U.S. Department of Agriculture's reduction in estimates for U.S. production and ending stocks. Strong U.S. corn exports are also supporting prices.
Looking forward refer to the economic calendar below to see the upcoming events scheduled for today and the rest of the week.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team