Greenback Holds Ground After Slight PPI Miss, Sterling Weakens Again as Gilt Yields Eye 5%
| Action Insight Mid-Day Report 1-14-25 |
Greenback Holds Ground After Slight PPI Miss, Sterling Weakens Again as Gilt Yields Eye 5% |
Dollar is holding steady against its peers in early U.S. trading, with softer-than-expected PPI report failing to trigger significant selling pressure. Market sentiment continues to shift toward the possibility that the Fed might refrain from additional rate cuts in 2025. Fed funds futures are currently pricing in less than 60% probability of a 25bps rate reduction in the first half of the year. Attention now turns to Tuesday’s U.S. Consumer Price Index (CPI) data, which is anticipated to be a more significant indicator of inflationary trends and policy direction. Currently, the market expects a significant interest rate differential of 200-300 basis points between Fed and ECB by the terminal point of the currency easing cycle. Should domestic inflationary pressures in the US show any signs of resurgence, this differential could skew further toward the higher end of the range, solidifying Dollar strength. Meanwhile, the Pound continues to bear the brunt of market concerns over the UK's fiscal health. The relentless selloff in UK government bonds drove 10-year Gilt yield to above 4.9%, with a break above 5% psychological barrier appearing increasingly imminent. Such a move could intensify the downward pressure on Sterling, which is already grappling with domestic economic challenges. The UK is bracing for a pivotal week, with CPI data scheduled for Wednesday and GDP figures following on Thursday. These releases could determine whether the Pound can stabilize or face further deterioration. On the weekly leaderboard, Sterling is the worst performer so far, followed by Yen and Dollar. Kiwi leads the pack with Aussie and Loonie close behind. Euro and Swiss Franc remain in middle positions...... |
GBP/USD Mid-Day Outlook Daily Pivots: (S1) 1.2131; (P) 1.2172; (R1) 1.2244; More... Intraday bias in GBP/USD remains neutral as consolidations continue above 1.2099 temporary low. While stronger recovery cannot be ruled out, outlook will stay bearish as long as 1.2486 support turned resistance holds. Break of 1.2099 will resume the decline from 1.3433 to 100% projection of 1.3433 to 1.2486 from 1.2810 at 1.1863. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 23:30 | AUD | Westpac Consumer Confidence Jan | -0.70% | -2% | | 23:50 | JPY | Bank Lending Y/Y Dec | 3.10% | 3.10% | 3.00% | 2.90% | | 23:50 | JPY | Current Account (JPY) Nov | 3.03T | 2.59T | 2.41T | | 05:00 | JPY | Eco Watchers Survey: Current Dec | 49.9 | 49.6 | 49.4 | | 11:00 | USD | NFIB Business Optimism Index Dec | 105.1 | 100.8 | 101.7 | | 13:30 | USD | PPI M/M Dec | 0.20% | 0.30% | 0.40% | | 13:30 | USD | PPI Y/Y Dec | 3.30% | 3.40% | 3.00% | | 13:30 | USD | PPI Core M/M Dec | 0.00% | 0.20% | 0.20% | | 13:30 | USD | PPI Core Y/Y Dec | 3.50% | 3.80% | 3.40% |
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