Expectations About Raise of Interest Rate Increase
MARKET NEWS SUMMARY
Producer price index data showed a less-than-expected decrease in price inflation at factory gates, and the index fell from 6.5% to 6.0%, though it was expected to decrease to 5.4%.
On Thursday, Wall Street closed sharply lower especially after unexpectedly strong inflation data and a decline in weekly jobless claims raised fears that the US Fed will continue to raise interest rates to calm rising prices.
The dollar is heading for a weekly gain of more than 2% against the yen. It is the dollar’s best week since last October.
Dollar index (USDX)
The dollar rose as US Treasury yields rose on Friday, February 17, heading for a third week of gains as a wave of strong economic data in the United States increased market expectations that a new interest rate hike is on the horizon.
Data released on Thursday showed an unexpected drop in the number of Americans filing new claims for unemployment benefits last week. Meanwhile, other data showed that, in January, monthly producer prices reached their highest level in seven months.
Against a basket of currencies, the dollar index advanced 0.09% to 104.20 after reaching the highest level in more than a month at 104.24 in the previous session.
Pivot Point: 103.85
| Resistance level | Support level |
| 104.25 | 103.54 |
| 104.55 | 103.15 |
| 105.25 | 102.45 |
British Pound (GBPUSD)
The new data boosted the dollar, which caused the British pound to fall to its lowest level in six weeks at $1.1957 on Friday, while the euro dropped from 0.15% to $1.0657.
Supported by the strength of the US dollar, the pound is attempting to stabilize below its pivot point at 1.2006 with bearish momentum.
Pivot Point: 1.2006
| Resistance level | Support level |
| 1.2050 | 1.1940 |
| 1.2115 | 1.1895 |
| 1.2160 | 1.1800 |
Spot Gold (XAUUSD)
The value of the US dollar has impacted the prices of gold, which are denominated in US dollars. This follows the release of the US Producer Price Index data, which came in stronger than expected. Yesterday’s Thursday data revealed a decrease in Unemployment Claims in the US to 194,000, contrary to expectations of an increase to 200,000.
Gold prices will continue to fluctuate amidst the ongoing release of economic data, as investors continue to search for clues regarding monetary policy decisions.
Pivot Point: 1,836
| Resistance level | Support level |
| 1,845 | 1,827 |
| 1,853 | 1,818 |
| 1,871 | 1,801 |
US Crude Oil (USOUSD)
On Friday, February 17th, oil prices declined, heading for weekly losses as strong US economic data increased concerns about the Fed’s decision to continue its monetary tightening policy to curb inflation, which could affect fuel demand despite growing crude inventories.
The futures contracts for Brent crude fell by 49 cents, or 0.6%, to $84.65 per barrel, while futures contracts for US West Texas Intermediate crude also dropped by 46 cents, or 0.6%, to $78.03. Both types of crude oil are set to register a weekly decline of around 2%.
This week, the International Energy Agency said that China is expected to account for almost half of the world’s oil demand growth this year after easing COVID-19 restrictions. However, production constraints imposed by OPEC+ countries may result in a supply shortage in the second half of the year.
Pivot Point: 78.50
| Resistance level | Support level |
| 79.00 | 77.45 |
| 80.15 | 76.85 |
| 81.50 | 75.25 |
