After Bitcoin-ETF Approval, Speculators Switch to Ethereum

Ethereum is obviously attracting the attention of speculators, adding over 13% in less than 36 hours, as it is the next favourite for ETP approval. Potentially, these expectations could drive the price of ETH up in the next couple of months all the way to the $3500 area – the peak in April 2022.

US: Core Inflation Inches Down to 3.9% in December 

No huge surprises in the December CPI report. While the monthly gain on headline inflation came in a touch above expectations, the more important core measure was bang-on consensus. Importantly, both the three-and-six-month annualized rates of change (at 3.3% and 3.2%, respectively) on core sit well below the twelve-month change, suggesting a further deceleration in the months ahead.

Sunset Market Commentary

Trading initially was a long-drawn countdown to today’s US December CPI. Investors tentatively positioned for a rather soft report, with US yields easing 3-4 bps before publication of the data.

US and UK Launch Airstrikes on Yemen's Houthis

Following the airstrike launched by the US and UK against Houthi rebel target in Yemen overnight (see more below), geopolitics will be on top of the agenda.

Crypto Market Fluctuates But Does Not Move

Cryptocurrency market capitalisation is at the same level as the previous day at $1.76 trillion, with the market showing impressive intraday amplitude on Thursday, gaining and then losing around 7% across the major instruments.

GBP/USD Yawns After Strong UK GDP

The British economy grew in November by 0.3% m/m, rebounding from a 0.3% decline in October and edging above the market estimate of 0.2%. This was the sharpest GDP growth since July and was driven by stronger activity in services, retail sales and manufacturing. The news was not as good from a three-month snapshot, however. The economy contracted 0.2% in the three months to November, unchanged from the previous release and missing the market estimate of -0.1%.

Australian Dollar Edges Up as China CPI Slips

The Australian dollar has edged higher on Friday. In the European session, AUD/USD is trading at 0.6693, up 0.09%.

Sunset Market Commentary

The US/UK air strikes against Houthi targets in Yemen retaliating for shipping attacks in the Red Sea dominated media, but their market impact remained rather limited for now. The biggest move came on the oil market with Brent crude rising from $77/b before the first strikes to as high as $80.5/b.

Week Ahead – China GDP and UK December CPI Reports Eyed Amid Rate Cut Frenzy

The Chinese economy suffered several wobbles in 2023, as the property crisis went from bad to worse. Markets held their breath for a major stimulus announcement, but with one eye on deleveraging, authorities’ response only went as far as offering targeted drip-feed measures, leaving investors flabbergasted and disappointed.

Will the UK Inflation Data Pour Cold Water on BoE Rate Cut Bets?

At its December policy gathering, the Bank of England kept interest rates unchanged via a 6-3 vote, with the three dissenters preferring to increase the Bank rate by another 25bps to 5.5%. In the accompanying statement it was noted that policy “will need to be sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term,” with Governor Bailey highlighting that view at the press conference following the decision.