| Time | Country | Event | Period | Previous value | Forecast | Actual |
|---|
| 01:45 | China | Markit/Caixin Services PMI | December | 51.5 | 51.6 | 52.9 |
| 07:45 | France | CPI, y/y | December | 3.5% | 3.8% | 3.7% |
During today's Asian trading, the US dollar declined slightly against major currencies, but remained near the 3-week high reached yesterday. Overall, investors were cautious after an impressive risk rally last month and were preparing for the publication of important US data.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) fell by 0.08% to 102.41. Yesterday, the index rose by 0.29% as investors revised their expectations regarding the scale of Fed rate cuts this year. Meanwhile, the minutes of the Fed's December meeting showed that policymakers were convinced that inflation was under control and also expressed concern about the risks of an "overly restrictive" monetary policy for the economy. However, the minutes did not provide clear indications of when the Fed might start cutting rates, as policymakers still see the need for rates to remain restrictive for some time. On Friday, a key report on the US labor market will be presented, which is likely to provide additional clarity on how much room the Fed has for rate cuts. According to the CME FedWatch Tool, markets see a 66.5% probability of a 25 basis point rate cut at the Fed meeting in March 2024 and a 96.2% probability of a rate cut in May 2024.
The yen consolidated against the US dollar, despite the fact that Japan is back from an extended New Year break. Yesterday, the yen fell by 0.92%, recording the largest decline since October.
The Australian dollar, often used as a proxy for risk appetite, rose 0.4% against the US dollar, helped by favorable data from China (Australia's main trading partner). The results of a study published by Caixin and S&P Global showed that the growth of activity in the service sector accelerated to a 5-month high, helped by an increase in new orders. The service PMI rose to 52.9 in December from 51.5 in November. The index remains above the 50-point mark, indicating an expansion of activity in the sector, for the 12th month in a row. In addition, the December reading was the highest since July. Economists had expected the index to rise only to 51.6. The Composite PMI, which measures changes in activity in the manufacturing and services sectors, rose to 52.6 from 51.6 in November. This was the 12th straight month of growth in private sector activity and the steepest pace since May.