In this article, we have covered the highlights of global market news about the USD/JPY, AUD/USD, USD/CAD and EUR/USD.
USD/JPY recovers from multi-month lows and trades over 130.00.
After reaching its lowest point since late May at 129.50 during Asian trading hours, USD/JPY abruptly changed course and soared to 131.00. However, the pair lost its bullish vigor, and at 130.40, it was last spotted losing 0.25% on the day.
The rapid increase in the US dollar’s value in the European morning helped the pair on Tuesday. The Japanese yen strengthened earlier in the day as anticipation for a hawkish Bank of Japan (BOJ) policy change increased. The BOJ was reportedly contemplating boosting its inflation projections for 2023 and 2024 in January, according to Nikkei’s story over the weekend.
It is challenging for the pair to maintain its positive momentum if the benchmark 10-year US Treasury bond yield is down more than 2% daily and just around 3.75%.
Despite the favorable change in risk sentiment, the US Dollar Index is still up 1% daily.
After the New Year’s break, trading conditions have returned to normal, although early Tuesday’s market movement is still erratic. Futures for US market indexes are up more than 1%.
AUD/USD hits 0.6700 amid a sharp 1.50% selloff.
From one-week lows of 0.6695, the AUD/USD sees a modest rebound, although bulls are cautious above the 0.6700 resistance level. As investors seek refuge in the US Dollar on the first trading day of the year, the US Dollar has the upper hand so far this Tuesday across the FX board.
Investor confidence has continued to decline due to worries about China’s covid, soaring inflation, and the potential for a global recession. As they prepare for a new economic report from the US later on Tuesday, markets may be establishing additional US Dollar bets to counter such risks. In addition to a few minority surveys, the US S&P Global Manufacturing PMI will be released during the American session.
The US Dollar’s strength has been the dominant market mover, preventing the Australian dollar from taking advantage of the risk flows and positive Chinese Caixin Manufacturing PMI data. China’s Caixin Manufacturing PMI for December fell to 49.0 from the anticipated 48.8 and the previous reading of 49.4.
USD/CAD rises beyond 1.3600 due to the US Dollar’s resurgence in strength.
In the European session on Tuesday, USD/CAD gained positive momentum and moved beyond 1.3600 after falling near 1.3500 earlier in the day. USD/CAD was trading at 1.3625 at the time of publication, up 0.4% for the day.
The pair is recovering ahead of the Manufacturing PMI data from Canada and the US due to the general US Dollar strength.
The market volatility increased early on Tuesday as traders returned from the New Year’s break, and the US Dollar began to outperform its competitors despite the market’s improved attitude.
At 104.60, the US Dollar Index, which measures how the US Dollar is doing versus its main competitors, was last up 1.1% for the day. As the yield on US 10-year Treasury bonds has decreased by more than 2% and US stock index futures have increased by more than 1%, it is difficult to identify the driving force behind the restored strength of the US Dollar.
EUR/USD falls to 1.0550 as the US Dollar enjoys strong demand.
After falling abruptly from two-week highs over 1.0700, EUR/USD is severely sold below 1.0600. Despite the positive market climate, the substantial increase in the US Dollar across the board is crushing the Euro.
Before this week’s important US economic events, markets prefer to seek safety in the US Dollar as they resume trading after the lengthy New Year’s holiday. S&P Global Manufacturing PMI, the first significant US economic statistics, will be announced on Tuesday. However, the focus will be on the Nonfarm Payrolls and the Fed’s December meeting minutes.
The recent hawkish remarks from European Central Bank policymaker Joachim Nagel haven’t helped the Euro at all, as EUR/USD is down 0.90% at the time of writing to trade at 1.0570. The duo also makes light of the US Treasury bond rates’ lackluster performance, given how strong US Dollar demand is.
Euro bulls are not particularly pleased with an unexpected improvement in the German job market. Germany’s unemployment rate decreased to 5.5% in December, although the reported period’s unemployment change decreased by 13K instead of the expected +15K. Now, all eyes are on the German inflation statistics for new trade vigor.
Please click here for the Market News Updates from 2 January, 2023.