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The information provided herein is generated by experimental artificial intelligence and is for informational purposes only.
EUR/USD and EUR/GBP continue to rise, while GBP/USD shows signs of stalling following a slightly softer UK inflation report. EUR/USD is recovering from a two-year low of $1.0178, targeting resistance levels between $1.0333 and $1.0344. Meanwhile, GBP/USD is gradually recovering from a 15-month low of $1.21, with a focus on overcoming the $1.225 high to aim for $1.2353.
Bitcoin's price surged to nearly $100,000 following US inflation data, with consumer prices rising 2.9% in December and a core inflation rate decrease to 3.2%. Anticipation of a crypto-friendly government under Donald Trump, potentially introducing strategic Bitcoin reserves, is fueling investor optimism. A sustained rise above $100,000 is crucial for approaching the previous record high of over $108,000, while the $90,000 mark remains a key support level.
In December, the US Consumer Price Index (CPI) rose 2.9% annually, matching expectations, while the core index increased by 3.2%, slightly below forecasts. Monthly core prices grew by 0.2%, indicating no immediate inflationary concerns, allowing the Federal Reserve to maintain current interest rates through 2025. Positive market reactions followed, with equities rising and Treasury yields falling.
US homebuilder sentiment is notably negative amid a cold winter, with stocks down significantly in late 2022. Despite rising mortgage rates and affordability issues, UBS analysts see strong housing fundamentals and potential investment opportunities, particularly for public builders poised to gain market share. Elevated incentive activity may impact margins, but valuations are considered undemanding, suggesting potential for strong shareholder returns in the long term.
The US inflation rate increased to 2.9% in December, driven by higher energy and food prices, while core inflation slightly decreased to 3.2%. Despite a robust labor market, the Fed may not lower interest rates if economic growth remains strong, as it could threaten long-term inflation targets.
Emerging-market equities and currencies are at risk of further declines due to unaccounted threats from potential tariffs under Donald Trump, according to UBS. The firm notes that the current market pricing of risks remains historically low, with significant losses already recorded since the US election. China's deflation is enhancing the yuan's competitiveness, which could pressure production and capital expenditure in other emerging markets, particularly as tariffs may slow China's imports and impact commodity exporters. Countries like Mexico, Vietnam, and Korea face heightened uncertainty due to their trade surpluses with the US.
Investors are closely monitoring upcoming US inflation data, with expectations of a year-on-year rate of 2.9% and core inflation at 3.3%. The focus will also be on retail sales and Chinese economic indicators later this week. As Donald Trump's inauguration approaches, concerns over potential tariffs could influence inflation and dampen hopes for interest rate cuts by the Federal Reserve.
The FTSE 100 is trading around its 200-day SMA at 8,224 following a softer-than-expected UK inflation print, with support levels at 8,200 and 8,186. The DAX 40 shows slight gains ahead of US inflation data, while the Nasdaq 100 tests its support zone between 20,769 and 20,533, with potential downside if it falls below this range.
The USD/CHF has surged nearly 10% since October, reaching an almost one-year high as the US dollar strengthens due to robust economic data and a hawkish Federal Reserve stance. In contrast, the Swiss franc remains weak as inflation decelerates, limiting the Swiss National Bank's need for aggressive policy tightening. The currency pair is currently at the top of its long-term range, with potential targets for pullback at 0.88 and 0.84, while a breakout could lead to parity.
US December consumer price inflation is expected to show modest gains, with a significant rise in egg prices due to a supply shock. President-elect Trump plans to create an "External Revenue Service" to collect tariffs and duties, indicating a shift in trade policy. Meanwhile, UK inflation data fell short of expectations, primarily driven by housing costs, suggesting that negative perceptions may stem more from government policy than economic conditions.
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