The latest inflation data in the US prompted a rally on Thursday, but it did not lead to a strong rise in stock indices. This is because market players remain worried of the Fed's monetary policy, which continues to be tight and is likely to end with interest rates above 5% this year.

The report showed that consumer inflation continued to slow down in the US, with the year-on-year figure falling to 6.5% and the month-over-month data declining to -0.1%.

Although Fed Chairman Jerome Powell did his best not to comment on the issue, some members of the bank showed hawkish rhetoric in their speeches, arguing for continued increases in interest rates. This is unclear stance is the reason why investors are holding back in markets.

But there is another reason for the moderate market reaction, that is, the Q4 earnings reports from companies. Big US banks will release their data on this, which is likely to set the direction for markets. If they show good earnings and performance reports, yesterday's rally in the stock markets will continue, accompanied with a weakening of dollar.

Of course, the uncertainty will remain in markets until the outcome of the Fed meeting on February 1. This means that until then, players will continue to debate on whether the Fed will go for a 0.25% rate hike and then pause or not.

Forecasts for today:

AUD/USD

The pair is declining towards 0.6920. If this level holds, an attempt to rise to 0.7030 will happen.

XAU/USD

Gold tested the level of 1900.00 for the first time since May 2022. It could correct down to 1885.60, then return to 1915.80.