Gold Looking firm
Gold prices rose overnight and are currently trading at around US$ 1,940. Markets are anxious about the state of the US economy, which has been sluggish in recent months.
Rephrase Disappointing PMI data seems to have led many market participants to believe that the Federal Reserve will not raise interest rates as aggressively as previously anticipated. Yields on Treasury securities fell significantly across the board, with the largest declines seen at longer-term maturity levels.
The low return on investment offered by interest-rate products has likely encouraged investors to focus their attention on nonyielding precious metals.
The Federal Open Market Committee (FOMC) is scheduled to convene on Wednesday next week and many market participants expect the central bank to increase interest rates by 25 basis points. This news may affect the value of the US Dollar and gold prices accordingly.
Aussie Outlook:
While AUD/USD may find moderate support in the near-term on the back of increasing housing prices, analysts from the Australian central bank believe that CPI will reach 8% later this year before easing into the next cycle. If this occurs, the central bank may find itself in a difficult position due to public concerns over rising housing prices. Newspapers have been reporting extensively on what they call “the mortgage cliff,” which refers to the situation where interest rates rise.
Some borrowers who took out fixed-rate loans a few years ago when the interest rate was at 0.10% may now find themselves experiencing difficulty in paying those loans off as the current interest rate of 3.10% might be too much for some people’s budgets. This increase could also lead to further financial strain for these individuals, eventually resulting in real estate price declines.
Greenback Looking Directionless:
The US Dollar has yet to find any support at the 101.77 level that was tested last Monday, seven days after this price was reached. This area of interest on the chart appears weak and unstable, with no closed daily candles indicating a trend in favor of either buyers or sellers.
Crypto Update
Moody’s has downgraded the long-term credit rating of Coinbase, citing weakening earnings in 2022. The exchange was previously given a non-investment grade B2 status back in March.
On January 16, the digital renminbi platform was updated to include support for smart contracts. This innovation allows several new applications for China’s state-owned cryptocurrency. For example, on Tuesday morning (16 January), it was used to purchase securities as part of a pilot program.