Rising US treasury yields support the dollar
In the context of Davos summit discussions, ECB President Lagarde has inferred that the first interest rate cut of this year could happen in summer and emphasised again that the ECB remains data dependent in its approach vis-à-vis monetary policy. She also added that there are ongoing uncertainties concerning the economic outlook and inflation. Furthermore, she warned against being overly optimistic as this could dampen the central bank’s fight against inflation. She showed some reassurance by stating that the ECB is on the right track in reaching the 2% inflation target. These comments from Lagarde douse the hopes for early monetary policy easing and sent the EUR/USD pair up again. Eurozone annual harmonised index of Consumer prices and core harmonised index of Consumer prices grew as projected by 2.9% and 3.4% respectively. Christine Lagarde will be making a public appearance at the World Economic Forum in Davos again today. The minutes of the last Monetary Policy Committee of the ECB will be published in the course of the day and other data include Eurozone current account figures and the construction output.? The fibre is currently trading at 1.0892.
Yesterday US monthly retail sales grew by 0.6%, surpassing expectations of a 0.4% growth. Investors will be tuning in to Atlanta Fed President Raphael Bostic who will be sharing his views about the economic outlook. He is expected to support the perspective of differed interest rate cuts in order to allow inflation to slide further down. Monthly housing starts as well as building permits, jobless claims and the Philadelphia Fed manufacturing survey are due today. The greenback has surged at the back of rising treasury yields.? The yield of the 2-year note has surged to 4.34% while that of the 10-year note rose to 4.09%. The USD was trading at 103.21 against similar peers at the time of writing.
Oil prices have surged in the light of the meeting of the Organisation of the Petroleum Exporting Countries. Despite ongoing geopolitical tensions,? the demand for oil is poised to demonstrate strong growth in 2024 and 2025. The OPEC monthly report mentions a surge in oil demand to the tune of 2.25 million barrels per day this year while projections show a 1.85 million barrels per day increase in 2025. The WTI crude is currently selling for USD 73.23 a barrel.