WTI Falls to Near $70.50 as Supply Concerns Ease Following Trump-Putin Discussion

EUR/GBP softens to around 0.8340 in Thursday’s early European session.

UK GDP rose 0.1% QoQ in Q4 vs. -0.1% expected.

The German HICP climbed 2.8% YoY in January, as expected. 

The EUR/GBP cross loses momentum to near 0.8340 during the early European session on Thursday. The Pound Sterling (GBP) edges higher after the release of UK growth numbers. The attention will shift to the preliminary reading of the Eurozone Gross Domestic Product (GDP) for the fourth quarter (Q4), which will be published on Friday. 

Data released by the Office for National Statistics (ONS) showed on Thursday that the UK economy expanded 0.1% QoQ in Q4. The reading came in better than the market consensus of a 0.1% decline in the reported period. Meanwhile, the UK GDP grew 1.4% YoY in Q4 versus the 1.1% expected and 0.9% seen in Q3. The GBP trades firm in an immediate reaction to the upbeat UK GDP data.

Bank of England (BoE) Chief Economist Huw Pill said on Thursday that he “urges caution on interest rate cuts” because the long process of wrestling down inflation is not yet complete. Earlier this week, BoE policymaker Catherine Mann said that demand conditions are significantly weaker than before. She had also advocated for a larger interest rate cut in last week’s policy meeting, where the BoE unanimously agreed to lower rates by 25 basis points (bps).

On the Euro front, Destatis on Friday showed that the German Harmonized Index of Consumer Prices (HICP) rose 2.8% YoY in January, compared to the previous reading and the expectations of 2.8%. 

The European Central Bank (ECB) has lowered borrowing costs five times since last June and hinted at more policy easing. Traders expect the ECB to deliver three more interest rate cuts this year amid risks of inflation undershooting the central bank’s target of 2%. The ECB already reduced its Deposit Facility Rate by 25 bps to 2.75% in the January meeting.

Source: FXSTREET

The US Dollar (USD) struggles to find demand early Thursday after having failed to capitalize on January inflation data on Wednesday. The European economic calendar will feature Industrial Production data for December. Later in the day, January Producer Price Index (PPI) data from the US will be watched closely by market participants, who will also be awaiting new headlines surrounding US President Donald Trump's trade policy.

US Dollar PRICE This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Euro.

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

The US Bureau of Labor Statistics announced on Wednesday that the annual Consumer Price Index (CPI) rose by 3% in January, coming in above the market expectation and December's increase of 2.9%. Meanwhile, the core CPI rose by 0.4% on a monthly basis, following the 0.2% rise recorded in the previous month. With the immediate reaction, the USD gathered strength against its rivals. The improving risk mood, however, caused the USD to lose its footing later in the American session. 

President Trump said that he had a "lengthy and highly productive" phone call with Russian President Vladimir Putin to begin negotiations to end the war in Ukraine. In the meantime, Trump refrained from announcing reciprocal tariffs. According to CNBC, Trump could still unveil his reciprocal tariff plan before he meets with Indian Prime Minister Narendra Modi on Thursday. After closing marginally lower on Wednesday, the USD Index continues to push lower and was last seen near 107.50.

The UK's Office for National Statistics reported on Thursday that the Gross Domestic Product (GDP) expanded at an annual rate of 1.4% in the fourth quarter. This reading came in above the market expectation for an expansion of 1.1%. GBP/USD gathers bullish momentum following the upbeat data and trades above 1.2500.

The Bank of Canada's (BoC) Meeting Minutes showed late Wednesday that impending trade tariffs from the United States (US) have become a key risk to policy guidance looking forward. "BoC Governing Council felt that retaliatory measures by Canada and other nations would put upward pressure on inflation," the document read. USD/CAD stays under bearish pressure and trades at its lowest level since mid-December near 1.4250 early Wednesday.

After falling toward 1.0300 with the immediate reaction to US inflation data on Wednesday, EUR/USD regained its traction and ended the day marginally higher. The pair continues to push up toward 1.0450 to begin the European session.

USD/JPY gathered bullish momentum on Wednesday, supported by rising US yields, and gained more than 1% on a daily basis. The pair stages a downward correction toward 154.00 early Thursday.

Gold fell toward $2,860 in the early American session on Wednesday but managed to erase its daily losses. XAU/USD holds its ground on Thursday and rises toward $2,920.

Source: FXSTREET

Thailand's baht emerged as the major gainer among a group of developing Asian currencies on Thursday, supported by the upbeat mood in the gold markets, while equities in Manila advanced ahead of an expected rate cut by the central bank.

Thailand is a major trading hub for gold and the metal's advance over the past week amid concerns of a global trade war helped offset currency volatility fuelled by US President Donald Trump's tariff plans.

The baht gained as much as 0.5% against the US dollar, while the Singapore dollar and its Taiwanese counterpart were mostly steady.

Poon Panichpibool, a market strategist at Krung Thai Bank, attributed the baht's gain to the rise in gold prices and improving sentiment over the prospects of a peace deal in Ukraine.

The South Korean won and Malaysian ringgit added 0.3% and 0.1% respectively.

Overnight, data showed January US consumer inflation rose at its fastest pace in nearly 18 months, reinforcing the Federal Reserve's message that it was in no hurry to resume easing rates.

"Currency markets are also waving risk-off flags — the US dollar has broken higher, moving above its 50-day moving average, suggesting higher levels ahead for the safe haven currency," said Jessica Amir, market strategist at Moomoo Australia.

Equities rose in Asia trade on Thursday, as investors looked past the US inflation data and bet on an end to the war in Ukraine after Trump held separate phone calls with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy.

Shares in Seoul added 0.8% while those in Taipei gained 0.2%.

The Malaysian benchmark index and the Indonesian stock market, meanwhile, lost 0.6% and 1% respectively.

The Philippine central bank is set to meet later in the day with markets expecting a 25-basis-point interest rate cut to bolster an economy that has missed its growth target for two straight years.

The Philippine peso was flat while equities in Manila gained 0.8%.

Source: Theedgemarkets

GBP/JPY attracts strong follow-through buyers for the third straight day amid a weaker JPY.

The mostly upbeat UK macro data boosts the cross and contributes to the intraday strength.

The divergent BoJ-BoE policy outlook might keep a lid on any further appreciating move.

The GBP/JPY cross builds on this week's goodish recovery move from the vicinity of the 187.00 mark, or its lowest level since September 2024, and gains some follow-through positive traction for the fourth straight day on Thursday. Spot prices stick to intraday gains following the release of mostly upbeat UK macro data, though remain below the 193.00 mark through the early European session.

The UK Office for National Statistics reported that the economy unexpectedly grew 0.1% QoQ in the three months to December 2024 after recording zero growth in the previous quarter. Adding to this, the UK GDP expanded 1.4% year-on-year (YoY) in Q4 vs. 1.1% expected and 0.9% growth in Q3. Other data showed that Industrial Production and Manufacturing Production in the UK increased 0.5% and 0.7%, respectively, in December, both surpassing estimates. This, in turn, provides a modest lift to the British Pound (GBP), which, along with a mostly weaker Japanese Yen (JPY), continues to push the GBP/JPY cross higher. 

Investors remain worried about the potential economic fallout from US President Donald Trump's new levies on commodity imports and reciprocal tariffs. Apart from this, a generally positive tone around the equity markets turns out to be a key factor undermining the safe-haven JPY. However, bets that the Bank of Japan (BoJ) will hike interest rates further, bolstered by Japan's strong Producer Price Index (PPI) released earlier today, might hold back the JPY bears from placing aggressive bets. Apart from this, the Bank of England's (BoE) gloomy outlook could keep a lid on any further appreciating move for the GBP/JPY cross. 

In fact, the UK central bank last week halved its 2025 economic growth forecast from 1.5% to 0.75%. Adding to this, BoE Governor Andrew Bailey told reporters that the central bank expects to make further rate cuts this year. Hence, strong follow-through buying is needed to confirm that the GBP/JPY cross has formed a near-term bottom around the 187.00 mark.

Economic Indicator

Gross Domestic Product (QoQ)

The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The QoQ reading compares economic activity in the reference quarter to the previous quarter. Generally, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Source: FXSTREET

Malaysia’s economic growth in the final quarter of 2024 could potentially exceed expectations, following a strong performance in retail and wholesale trade data.

Gross domestic product (GDP) in the fourth quarter could expand faster than the consensus’ prediction and the official advance estimate of 4.8% year-on-year, economists said. The full GDP data is expected to be released on Friday.

“Growth is expected to be supported by continued expansion in the services, manufacturing and construction sectors,” said Hong Leong Investment Bank. The research house expects growth to come in at 5.0% year-on-year for the fourth quarter.

Data out on Wednesday (Feb 12) showed that Malaysia’s wholesale and retail trade picked up and grew 5.7% year-on-year in December 2024. Distributive trade is part of the services sector that accounts for more than half of the country’s economic output.

The last month of 2024 benefitted from holiday season and school breaks that typically bring a surge in festive shopping and higher family spending. An influx of foreign tourists and an increase in civil servant salaries also boosted private consumption.

Going ahead, “we anticipate sustained consumer demand” in the first three months of 2025, supported by the long school holidays, civil servants’ salary increases, the new minimum wage, and cash handouts, said BIMB Securities.

With strengthening consumer demand, spending patterns have increasingly shifted towards retail that now hold the highest ever share at 43.3% of the total distributive trade, BIMB Securities noted. Wholesale is still the largest component, at 44.3%.

There are downside risks, however, going ahead, from subsidy rationalisation that necessitate gradual implementation and government assistance measures as buffers to cushion the increase in costs of living, the house added.

Source: Theedgemarkets