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The USD gained upside traction on Wednesday as investors embraced the central bank’s hawkishness. Eurozone final inflation data was as expected in January though down from the previous print. Fed’s Jerome Powell indicated that ongoing rate hikes will be necessary to get inflation to restrictive measures. The South African government offered 13 billion rands in incentives to businesses and individuals to boost investments in renewable energy projects.
EURUSD dipped -0.13% in the wake of the Eurozone inflation data. The consumer price index year-on-year came in as anticipated at 8.6% in January though it declined from the previous read of 9.2%. The core yearly figures however rose to 5.3% from an anticipation of 5.2%. In the United States, the dollar remained bid after the FOMC meeting minutes published on Wednesday reinforced the central bank’s hawkish stance. In European trade, the pair was south of the 1.0600 mark after a rejection at the 1.0625 intraday resistance. Sellers may be challenged by the 1.0480 and 1.0450 before reclaiming the 1.0364 resistance-turned-support.
CADZAR edged +0.61% higher after producer prices in South Africa fell more than expected in January. On a monthly basis, the Producer price index fell -0.6% against a survey of -0.4% while the yearly reading dropped 12.7% vs the 12.8% expected. The government of South Africa said to take Eskom`s half debt over the coming 3 years after the finance minister delivered a speech amid severe power outages and rising food prices. The Canadian dollar also got a boost from an uptick in crude oil prices on the day. The pair remains bound in a 9-day range between 13.40 and 13.58 with near-term resistance at 13.60.
GBPAUD dipped by -0.36% following upbeat Australian economic data. The Australian Private New Capital Expenditure rose 2.2% from an estimate of 1.3% which showed an increase in capital inflows in the fourth quarter, ramping up demand for the AUD in the meantime. Bank of England’s Mann said in a speech that further rate hikes are needed sooner than later. The current drop may revisit 1.7550 before taking out the 1.7780 resistance.
European stocks were quite mixed after the key Eurozone CPI data and earnings reports. The FTSE100 tanked -0.12% as it moved in the 7900 regions. Further down, the index may revisit the 7800 mark after it takes out 7880 yesterday’s low. The CAC40 rose +0.18%, extending yesterday’s gains as bulls fight for 7400. DAX gained +0.20% moving between 15400 and 15528.
US stock futures traded north as the tech sector boosted gains. The tech-heavy Nasdaq gained +0.13% after Nvidia rose 8% on higher revenue and earnings. The NASDAQ100 got capped at the 12200 high and may retest the 12400 mark if the current high is breached. The S&P500 futures were up +0.10% currently challenged by 4000 to the downside. DJIA futures rose +0.11% capped by 33180 on the upside.
Elsewhere, crude oil prices rose ahead of the release of crude oil inventories. Stockpiles are expected to drop to 2.083 million from 16.283 million showing increasing demand in the US. The USWTI was up +1.11% above the $74.00 mark as $76.50 became a critical area to watch for upside traction. UK oil gained +1.13% as $82.50 may be a challenge to the upside.
