In the United States, Federal Reserve officials said last week that they need more inflation data before making any decision on interest rate cuts.
These statements came after an improvement in consumer sentiment in the United States, alongside strong labor market conditions, and retail sales data that indicated the economy is still strong.
The Interest Rate Tracker tool available on the Saudi Investing website showed that markets are predicting that the Federal Reserve will keep interest rates unchanged at its January meeting by 99%, with expectations for the central bank to cut borrowing costs by 25 basis points at its March meeting falling to 49% from 71% two weeks ago.
Fitch expects that the pace of interest rate cuts will be slower than financial market expectations, adding that it does not expect cuts from the Federal Reserve before June or July 2024, given the stability of wage inflation and service prices.
All of the above led to a decline in gold prices globally during these moments of trading, today, Monday, to levels of $2,021 an ounce.
Investors are awaiting the release of the U.S. Purchasing Managers’ Index report on Wednesday, fourth-quarter GDP estimates on Thursday, and personal consumption expenditure data on Friday.
Oil continues to lose ground due to unfavorable economic factors
Oil prices fell on Monday for the second day in a row as continued pressure from unfavorable economic factors weighed on global demand expectations, outweighing the impact of geopolitical concerns in the Middle East and an attack on a Russian fuel export terminal at the start of the week.
The price of Brent crude fell 41 cents, or 0.5%, to $78.15 a barrel after falling 54 cents at the settlement on Friday.
The front-month West Texas Intermediate (WTI) crude contract fell two cents to $73.39 a barrel.
There was little change in prices despite news of what was claimed to be a Ukrainian drone attack on a Russian fuel export terminal. Russian gas producer Novatek said on Sunday it had been forced to suspend some operations at the Baltic Sea-facing facility due to a fire.
In the Middle East, the war in the Gaza Strip is raging, while the United States bombed another anti-ship missile that the Houthis in Yemen were preparing to launch towards the Gulf of Aden on Saturday.
The Houthis’ attacks in the Red Sea and the Gulf of Aden have disrupted global trade and led to a decline in crude supplies in European and African markets.
The Yen begins to recover as the Japanese central bank’s meeting begins
The yen rose in the Asian market on Monday against a basket of global currencies, starting to recover from a two-month low against the US dollar, on track to achieve its first gain in the past six days, as selling operations stopped with the start of the Bank of Japan meeting.
The first meetings of 2024 will take place later today in Tokyo, with decisions to be announced on Tuesday, amid widespread expectations of maintaining highly accommodative monetary policy tools without any significant change.
This rise is also supported by the halt in the rise in US Treasury yields, awaiting more evidence on the path of interest rate cuts by the Federal Reserve this year.
Markets Now:
The Dow Jones index is stable at levels of 37,900 points.
The Nasdaq index rose by 0.50% to levels of 17,400 points.
Gold fell by 0.30% to levels of 2,022 dollars per ounce.
U.S. crude oil rose by 0.30% to levels of 73.50 dollars per barrel.
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