Jan

U.S. Core PCE Price Index, Canada GDP, Chicago PMI

31/01/2025 - 08:17 UTC

The US dollar saw another session of small gains against most major currencies on Thursday, with the dollar index (USDX) up by a mere 0.19%, as investors remain on the sidelines with the prospect of trade tariffs under U.S. President Donald Trump, who threatened to impose steep tariffs on the BRICS bloc if they move ahead to create their own currency and move away from the dollar. Trump also stated that he is planning to implement 25% tariffs on Canada and Mexico, and 10% tariffs on China.

Positive sentiment has returned to Wall Street, as all three main stock indices moved higher as Apple and Microsoft, among other companies, released their earnings reports. Looking ahead, investors are focused on Friday's inflation data release, which will provide further clues about the Federal Reserve's interest rate policy after its more aggressive stance earlier this week.

Apple's first-quarter earnings exceeded analysts' expectations, driven by strong growth in its services business, which helped offset declining iPhone sales amid intensifying competition in China's smartphone market. Following the earnings release, Apple's stock price dipped by 1% in after-hours trading. The company reported earnings per share of $2.42 on revenue of $124.3 billion for the quarter ending December 28. These figures surpassed analysts' forecasts of $2.36 per share and $124.12 billion in revenue.

In other news, Caterpillar's stock price fell 4.6% due to disappointing fourth-quarter revenue and a cautious outlook for 2025. United Parcel Service saw an even larger decline, dropping over 14%, after lowering its 2025 forecast and significantly reducing its deliveries for Amazon by more than half.

Investors are eagerly awaiting earnings reports from major players like AbbVie, Exxon Mobil, Chevron, Novartis, and Colgate-Palmolive. These companies span diverse sectors, including pharmaceuticals, energy, and consumer goods, and their results will offer valuable insights into the overall economic landscape.

For Friday the focus could turn to the release of the Core PCE price index, the Fed’s favorite gauge for inflation, Canada’s GDP data, the US employment cost index, US personal income and personal spending and the Chicago PMI.

EUR/USD

The EUR/USD pair declined for the fourth consecutive trading session on Thursday, briefly touching a peak near 1.0450 before retreating to close just below the 1.0400 level. The Euro’s recent bullish momentum appears to be waning as investors turn their attention to upcoming economic data releases. A series of key German economic indicators are set for release early Friday, followed by an important U.S. inflation report.

European Central Bank (ECB) President Christine Lagarde sought to reassure markets during the early U.S. trading session on Thursday, downplaying concerns over recent weak European data. Lagarde emphasized that one month or quarter of disappointing figures does not necessarily indicate a lasting trend.

In the U.S., economic data released on Thursday painted a mixed picture, adding to market uncertainty. Investors will now shift their focus to Friday’s release of the U.S. Personal Consumption Expenditures Price Index (PCEPI), the Federal Reserve’s preferred measure of inflation.

Gold

Gold prices soared to a new all-time high of $2,798 on Thursday following U.S. economic data that signaled a slowdown, increasing expectations that the Federal Reserve may eventually cut interest rates despite keeping them steady at Wednesday’s meeting.

Investor sentiment turned bearish on economic growth after the final reading of fourth-quarter 2024 Gross Domestic Product (GDP) revealed slower-than-expected expansion.

As investors assess the evolving economic landscape, gold continues to serve as a preferred safe-haven asset, with further price movements likely hinging on future Fed policy decisions and macroeconomic indicators.

WTI Oil

Oil prices edged slightly higher on Thursday, supported by dip buying, yet remained on track for a second consecutive week of losses as market participants weighed the potential impact of trade tariffs under U.S. President Donald Trump.

On Thursday, Trump reaffirmed his commitment to imposing 25% import tariffs on Canada and Mexico, citing their alleged involvement in illegal immigration and fentanyl trafficking into the U.S. While the president has not yet decided whether to include oil imports in these tariffs, such a move could significantly impact U.S. gasoline prices.

Beyond trade tensions, investors are closely watching the release of the December PCE price index—the Federal Reserve’s preferred measure of inflation.

US 500

U.S. stock index futures saw slight gains on Thursday as Wall Street digested a wave of corporate earnings from major firms including Apple and Microsoft. Investors are now shifting focus to a key inflation report due on Friday.

Investors analyzed earnings reports from major tech players, including Apple Inc., Microsoft, Meta Platforms Inc., and Tesla Inc., following the recent launch of a low-cost Chinese AI model.

Microsoft shares dropped 6% despite exceeding earnings expectations, as its cloud revenue and AI investments failed to impress investors. Meanwhile, Apple reported stronger-than-expected results but saw iPhone sales fall short of estimates. Apple stock jumped over 3% in after-hours trading after shedding nearly 1% earlier in the session.

U.S. Core PCE Price Index, Canada GDP, Chicago PMI

EUR/USD

Gold

WTI Oil

US 500

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