On Thursday, January 23rd, data released by the U.S. Bureau of Economic Analysis showed that the final annualized quarter-on-quarter growth rate for U.S. real GDP in the third quarter was 4.4%, slightly higher than market expectations and the preliminary reading of 4.3%, marking the fastest growth rate in two years. Meanwhile, consumer spending grew at an annualized rate of 3.5% last quarter, with service expenditure reaching its fastest pace in three years, and goods spending also accelerated compared to the previous quarter. The final Core Personal Consumption Expenditures (PCE) Price Index for the third quarter was 2.9%, in line with expectations, indicating no significant increase in inflationary pressures. The report showed that following a 0.6% contraction in the first quarter, real GDP rebounded strongly in the second quarter, growing at an annualized rate of 3.8%. Combined data from the first three quarters suggests the U.S. economy grew at an annualized rate of 2.5% through the first three quarters of 2025. This round of growth was driven by consumer spending, exports, government expenditure, and investment, while a decrease in imports also contributed positively to GDP.
Furthermore, the Bank of Japan kept its policy rate unchanged at 0.75% on Friday, aligning with market expectations, but raised its medium- to long-term inflation forecasts, indicating a more optimistic assessment of price pressures. This was the bank's first policy meeting following last month's rate hike, as it is currently evaluating the actual impact of the tightening measure on the economy. The Bank of Japan maintained its core CPI forecast for fiscal year 2025 at 2.7% but raised its expectations for the following two fiscal years. The core CPI forecast for fiscal 2026 was revised up from 1.8% to 1.9%, while the forecast for fiscal 2027 remained at 2.0%. The core-core CPI forecast, which better reflects underlying price trends, saw more significant upward revisions. The forecast for fiscal 2025 was raised from 2.8% to 3.0%, for fiscal 2026 from 2.0% to 2.2%, and for fiscal 2027 from 2.0% to 2.1%. The central bank stated that inflation expectations are rising moderately and medium- to long-term inflation expectations may continue to rise gently. However, the bank also noted that core consumer inflation may slow to below 2% in the first half of this year.
Key data to watch today includes the UK's monthly seasonally adjusted retail sales for December, the Eurozone's preliminary SPGI Manufacturing PMI for January, the UK's preliminary SPGI Services PMI and preliminary SPGI Manufacturing PMI for January, Canada's monthly retail sales for November, the U.S. preliminary SPGI Manufacturing PMI for January, and the final University of Michigan Consumer Sentiment Index for January.
Gold/USD Gold surged significantly yesterday, once again refreshing its historical peak, with the spot price currently trading around $4960. Besides a softening US Dollar Index providing some support, persistent trade tensions and geopolitical risks fueling risk-aversion sentiment were also major factors supporting the safe-haven commodity's climb. Additionally, expectations for the Federal Reserve to implement two interest rate cuts within the year also provided some underpinning for gold. Today, focus is on resistance near the $5000 level, with support below seen around $4900.
AUD/USD The Australian Dollar rose sharply yesterday, breaking through the 0.6800 mark to hit a fresh 15-month high, with the spot price currently trading around 0.6850. Apart from a weaker US Dollar Index providing some support, better-than-expected Australian economic data released during the session also bolstered the Aussie. Furthermore, heightened expectations for an interest rate hike by the Reserve Bank of Australia provided additional support for the pair. Today, attention is on resistance near the 0.6950 level, with support below seen around 0.6750.
USD/JPY USD/JPY edged higher in volatile trading yesterday, closing with modest gains on the daily chart, with the spot price currently trading around 158.60. Besides ongoing concerns about Japanese political uncertainty supporting the pair, generally positive U.S. economic data released during the session also provided some lift. Additionally, a slight cooling of risk-aversion sentiment in the market contributed to the pair's strength. Today, focus is on resistance near the 159.50 level, with support below seen around 157.50.
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