The greenback drifted off multi-month lows on Tuesday, whilst the yen hung close to seven-month highs as traders held their breath for a possible policy shift on the financial institution of Japan. The EUR/USD pair gained traction this week and rose above 1.0900 before retreating slightly in the early morning European market. Over the weekend, a member of the ECB’s Governing Council said that he sees grounds for significant interest rate increases from the central bank this winter and spring. Meanwhile, a recent Reuters poll showed that most economists believe that the ECB will opt to raise its policy rate by 50 basis points at their February meeting.
Japanese Yen Urgent Update:
Speculation has been constructed about a change or giving up the yield curve management, given that the market-driven 10-year yields above a ceiling set by the bank of Japan (BOJ) of .5% on Friday and Monday, and that the amount of bond buying to defend it is beginning to be unsustainable.
USD/JPY has surged in value after news emerged from the Bank of Japan that all offices were willing to offer loans worth 1 Trillion through an auction starting on January 24. This agreement will last until January 24th as well.
The recent moves in the foreign exchange market have been exacerbated by thin liquidity conditions in the region. This is due to holidays being observed in China, Singapore, and Hong Kong, which has reduced available funding for other markets.
CAD Move looks Imminent:
On Friday, the US Dollar dropped against the Canadian Dollar significantly, closing at around 1.3400. The pair remained relatively quiet throughout European morning trading. Statistics Canada is scheduled to release its New Housing Price Index data later in the day; analysts are expecting it to come in at -0.2%.
GBP looking Tired:
The GBP/USD pair climbed toward the 1.2450 level during Asian trading hours on today but later retreated back toward the 1.2400 mark. This movement was likely influenced by market sentiment and concerns over potential data releases in the US Dollar’s favor. Despite this volatility, risk appetite appears to be relatively stable at present
Bitcoin continued to surge past the $23,000 mark for the first time in over two months on Saturday but struggled to maintain momentum as it found support near that level early Monday.
Ethereum also saw significant gains last week and has managed to keep its value steady throughout this latest uptrend while Bitcoin appears to be consolidating below $23,000.