Here’s what you need to know on Thursday, January 5:
The US dollar held its ground against its major rivals early Thursday as investors appeared to have moved to the sidelines ahead of key macroeconomic data releases. The hawkish tone seen in the minutes of the Federal Reserve’s December meeting also provides support for the currency with the benchmark 10-year US Treasury bond yield above 3.7% after a two-day slide. Trade balance data from Germany and November producer price index figures for the Eurozone are published in the European Economic Record. Later in the day, the ADP will publish the monthly private sector employment report for the United States. Weekly Initial Jobless Claims and Goods Trade Balance data will also be watched in the second half of the day for fresh impulses.
The risk-positive market environment made it difficult for the US dollar to find demand on Wednesday. In the American session, however, the ISM’s Manufacturing PMI report showed that employment in the manufacturing sector unexpectedly grew in December. In addition, the US Bureau of Labor Statistics reported that there were almost 10.5 million jobs in the last business of November, compared to the market expectation of 10 million. The upbeat employment-related data helped the US dollar shake off the bearish pressure.
Meanwhile, the FOMC said in the minutes of its December meeting that most participants agreed that it would take “substantially more evidence” of progress to confirm that inflation is on the downward path. The publication also reminded investors that policymakers want to ensure that markets do not see the slower pace of rate hikes as preparation for a policy pivot. The US dollar index erased much of its daily losses and closed above 104.00 on Wednesday before entering a consolidation phase on Thursday.
EUR/USD snapped a two-day losing streak on Wednesday. The pair fluctuates in a narrow channel slightly above 1.0600 in the European morning. It is worth noting that Euro Stoxx 50 futures traded flat on the day, reflecting the cautious market attitude.
GBP/USD gained nearly 100 pips on Wednesday but struggled to maintain its bullish momentum. At press time, the pair was moving up and down at 1.2050. The Times reported late Wednesday that British Prime Minister Rishi Sunak plans to announce minimum strike legislation on Thursday.
USD/JPY Trading modestly lower on the day below 132.50 early Thursday after adding more than 150 pips on Wednesday. Citing three sources familiar with its thinking, Reuters reported on Thursday that the Bank of Japan (BoJ) is likely to raise fiscal 2022 and 2023 forecasts for the core consumer price index (CPI) in its new quarterly projections.
USD/CAD seems to have entered a consolidation phase slightly below 1.3500 after suffering heavy losses on Wednesday. Crude oil prices fell sharply on Wednesday after OPEC production appeared to have risen by 120,000 barrels per day in December despite production target cuts. A barrel of West Texas Intermediate lost more than 5% and settled near $73 on Wednesday. However, the poor performance of crude oil had little to no impact on the performance of the Canadian dollar.
Gold Price registered strong gains for the second straight day on Wednesday and registered its highest daily close in almost 7 months slightly above $1,850. XAU/SD remains really quiet on Thursday in the modest rebound witnessed in the 10-year US T-bond yield.
Bitcoin climbed to $17,000 on Wednesday but struggled to clear that level. BTC/USD was last seen flat on the day at around $16,850. Ethereum gathered bullish momentum and touched its highest level in three weeks at $1,272 on Wednesday before retreating back to the $1,250 area on Thursday.