Asia FX rises as dollar pulls back.
Most Asian currencies rose slightly on Thursday, while the dollar trimmed a bulk of its new year gains in anticipation of key U.S. inflation data for more cues on when the Federal Reserve could begin cutting interest rates.
But the Japanese yen hovered near one-month lows, seeing fresh weakness on growing conviction that the Bank of Japan will delay a pivot away from its ultra-dovish policy.
Dollar retreats, CPI data awaited for more rate-cut cues
The dollar index and dollar index futures both fell 0.1% in Asian trade, extending overnight losses as traders-maintained bets that the Fed will enact steep interest rate cuts this year.
Consumer price index (CPI) inflation data due later on Thursday is widely expected to factor into expectations for interest rate cuts this year. Headline inflation is expected to rise slightly, while core CPI is expected to fall further.
Gold prices recover some lost ground.
Gold prices rose in Asian trade on Thursday, recovering slightly from a rough start to 2024, with focus now squarely on upcoming U.S. inflation data for more cues on the Federal Reserve’s plans to cut interest rates.
The yellow metal was still reeling from steep losses over the first week of January, as traders questioned whether the Fed will begin trimming interest rates by as soon as March 2024.
Uncertainty over rate cuts spurred a sharp rebound in the dollar, which also weighed on gold. But the greenback gave up a bulk of its recent gains this week, while traders also largely maintained bets on a March rate cut.
This allowed gold prices some relief, although they remained within a $2,000-$2,050 an ounce trading range seen through most of December.
Spot gold rose 0.4% to $2,031.78 an ounce, while gold futures expiring in February rose 0.4% to $2,035.80 an ounce by 00:09 ET (05:09 GMT). Both instruments were down about 1.7% so far in 2024, but were sitting on an over 10% gain from the past year.
Bitcoin holds firm after regulators approve ETFs.
Bitcoin held steady on Thursday after regulators approved the first U.S.-listed exchange traded funds (ETFs) to track the world’s largest cryptocurrency, seen as a landmark move that could broaden its appeal to investors.
The Securities and Exchange Commission (SEC) said on Wednesday it approved 11 applications, including from BlackRock (NYSE:BLK), Ark Investments/21Shares, Fidelity, Invesco and VanEck, with most of the products expected to begin trading later in the day.
Bitcoin was little changed in Asian hours and was last at $46,337.
It had surged to its firmest in 21 months at $47,897 earlier in the week in anticipation of the SEC approval, after those expectations contributed to an impressive 156% gain in bitcoin last year.
Ether, the second-largest cryptocurrency, rose 0.2% to $2,590.20, after having peaked at $2,644 on Wednesday, its strongest since May 2022.
“The approval of these spot bitcoin ETFs is a pivotal moment in the evolution of the cryptocurrency market,” said Brett Tejpaul, head of Coinbase (NASDAQ:COIN) Institutional.
“With major asset managers bringing the world of digital assets to millions through this regulated product, these ETFs are set to catalyse industry growth, unlocking trillions in new capital.”
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