20/02/2025 - 08:45 UTCThe US dollar posted moderate gains against most major currencies on Wednesday, with the US dollar index (USDX) up by 0.13% as dollar traders are weighing U.S.-Russia negotiations on Ukraine and continuing tariff worries. The meeting in Saudi Arabia on Tuesday yielded promises of more negotiations, although media reports said Russia's demands had hardened, especially its stance against Ukraine receiving NATO membership.
In the meantime, Federal Reserve meeting minutes from late January showed officials were wary of inflation risks stemming from new U.S. trade and immigration policies. Concerns centered on potential supply chain disruptions and higher costs due to proposed tariffs, making them hesitant to consider interest rate cuts in 2025.
Wall Street sentiment remains positive, with the US 500 reaching a new record high on Wednesday, while the US tech 100 and the US 30 were relatively stable. In corporate news, Apple's (AAPL) stock remained nearly unchanged following the announcement of its new, lower-priced iPhone 16e. Occidental Petroleum (OXY) shares climbed over 4% despite production forecasts falling short, buoyed by a $1.2 billion asset divestiture plan. Conversely, Etsy (ETSY) shares tumbled 10% after reporting fourth-quarter revenue below analyst estimates.
Crypto trading volumes remain low, reflecting a cautious market while the overall market cap is at around 3.2 trillion dollars, a decrease from the 3.9 trillion seen earlier in December. This lack of activity has kept Bitcoin and Ethereum within a tight range, with analysts suggesting a breakout is needed to spark renewed market momentum. Investors are holding back, waiting for clearer market signals.
On the energy front, despite rising weekly inventories reported by the API, the two main crude oil benchmarks, WTI and Brent gained for a third consecutive session on Wednesday, amid continuing concerns over supply disruptions in Kazakhstan. Official oil inventory data from the U.S. Energy Information Administration (EIA) is due on Thursday.
For Thursday, the focus turns to the release of the U.S. Jobless Claims, the Philly Fed Manufacturing and speeches from FOMC Members Goolsbee, Musalem and Barr. On the earnings front, quarterly reports are due by Walmart and Alibaba.
The EUR/USD pair declined on Wednesday, weighed down by renewed tariff concerns and geopolitical tensions. The US Dollar (USD) found support as markets reacted to former President Donald Trump’s tariff threats, alongside broader risk aversion.
Investors are now focused on upcoming US economic data, including the weekly Initial Jobless Claims, the CB Leading Economic Index, and the Philly Fed Manufacturing Index, all scheduled for release on Thursday.
Minutes from the latest FOMC meeting, released Wednesday, confirmed that policymakers opted to keep interest rates unchanged in January. The Federal Reserve signaled a patient approach, emphasizing that further rate cuts would require clear signs of slowing inflation
Gold prices remained almost unchanged on Wednesday following the release of the Federal Reserve’s (Fed) monetary policy minutes, which confirmed that all policymakers unanimously voted to keep interest rates unchanged at the January meeting.
The minutes indicated that Fed officials viewed the risks to their dual mandate—employment and inflation—as broadly balanced. However, some policymakers expressed concerns that potential shifts in trade and immigration policy could slow the disinflation process.
Earlier in the session, Gold surged to a fresh all-time high amid renewed trade tensions. The rally was fueled by comments from former US President Donald Trump, who announced plans to impose 25% tariffs on automobiles, pharmaceuticals, and semiconductor imports.
Oil prices remained near a one-week high on Wednesday, supported by concerns over supply disruptions in Russia and the U.S., while markets awaited further clarity on sanctions as Washington attempts to broker a peace deal in Ukraine.
Geopolitical tensions and infrastructure attacks continue to impact Russian oil output. The Caspian Pipeline Consortium (CPC), a key export route for Kazakh crude, saw flows cut by 30-40% on Tuesday after a Ukrainian drone attack on a Russian pumping station.
In the U.S., extreme cold weather has also threatened oil supply, with the North Dakota Pipeline Authority estimating production in the state could decline by as much as 150,000 barrels per day.
The US 500 closed at a record high on Wednesday for the second straight session, as investors shrugged off signals from the Federal Reserve that interest rate cuts may remain on hold for an extended period.
The Federal Reserve’s January meeting minutes, released Wednesday, provided little new insight into monetary policy. However, they reinforced expectations that the Fed will hold interest rates steady in the near term.
Investors remain focused on upcoming economic data releases, which could further influence the Fed’s policy stance and market direction. Inflation trends and consumer demand signals will remain key drivers for equities in the coming sessions.
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