Forex Today: Dollar takes a breather ahead of mid-tier US data, Fedspeak Here is
what you need to know on Thursday, January 18: Escalating geopolitical tensions
in the Middle East coupled with China’s economic concerns continue to keep
markets jittery. China’s stock market extended its downtrend and hit a four-year
low, as the country’s Premier Li Qiang said in Davos on Wednesday that dashed
hopes of big stimulus coming through to support the dwindling economic recovery.
Further, US Federal Reserve (Fed) Governor Christopher Waller’s comments-led
reduced bets for aggressive rate cuts also added to the investors’ pain, as
markets reassess the expectations for the Fed policy pivot this year. Strong US
Retail Sales data also supported the less dovish Fed view. Retail sales in the
US increased 0.6% last month, exceeding the market forecast for a 0.4% rise.
Meanwhile, recent hawkish comments from the European Central Bank (ECB)
officials dashed hopes of a rate cut as early as April. ECB President Christine
Lagarde signaled a likely rate cut in the summer. After late Tuesday’s strikes
by the US military in Yemen against the anti-ship ballistic missiles in a
Houthi-controlled part of the country, Houthi rebels targeted a US-owned cargo
ship with a kamikaze drone in the Red Sea on Wednesday after Washington said it
would re-designate the Houthis to its list of “specially designated global
terrorists,” per BBC News. The US Dollar (USD) sees a decent pullback from
five-week tops near 103.70 against its major rivals, shrugging off encouraging
US economic data and the cautious market mood. The Greenback feels the heat from
sluggish US Treasury bond yields, with the benchmark 10-year US Treasury bond
yields on the defensive just above the 4.0% level. US Dollar price today The
table below shows the percentage change of US Dollar (USD) against listed major
currencies today. US Dollar was the weakest against the Japanese Yen.
The heat map shows percentage changes of major currencies against each other.
The base currency is picked from the left column, while the quote currency is
picked from the top row. For example, if you pick the Euro from the left
column and move along the horizontal line to the Japanese Yen, the percentage
change displayed in the box will represent EUR (base)/JPY (quote)
Markets now eagerly await the mid-tier US Jobless Claims, Housing Starts and
Building Permits data for a fresh take on the pricing of the Fed rate cut
expectations. Also, Atlanta Federal Reserve (Fed) President Raphael Bostic will
be closely scrutinized later in American trading. Moving onto the G10 FX space,
AUD/USD is back on the bid above 0.6550, having reversed the downbeat Australian
employment data-led dip to 0.6525. The Australian Bureau of Statistics (ABS)
showed that the number of Australians in employment fell by 65,100 in December.
The Unemployment Rate held steady at 3.9% due to a slump in the proportion of
people in work or looking for it, ABC News reported. NZD/USD tracked the AUD/USD
rebound and jumped off the 0.6100 barrier, posting small gains so far. USD/JPY
is correcting alongside the US Dollar, struggling below 148.00. The pair remains
pressured, despite expectations that the Bank of Japan (BoJ) is unlikely to
adjust its monetary policy settings next week. EUR/USD is flirting with 1.0900,
holding the upswing amid the pushback by the European Central Bank’s (ECB)
policymakers against interest rates cuts and a broadly weaker US Dollar. ECB
Minutes and the second appearance of President Lagarde in Davos will provide
some fresh trading incentives.
GBP/USD is better off and holding firm at around 1.2700, underpinned by the hot
UK inflation data, which helped diminish the odds for a BoE rate cut in the
first half of this year. USD/CAD remains depressed below 1.3500, as the WTI oil
looks to build on the previous rebound above $73. The geopolitical developments
between the US and the Iran-back Houthi rebels will likely remain in play. Gold
price is attempting a bounce from five-week troughs of $2,002 but it remains to
be seen if the recovery lasts amid bearish technicals.
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