Following the volatile action witnessed at the beginning of the week, financial markets remained choppy on Tuesday. In the absence of high-impact data releases and fundamental drivers, major currency pair stay relatively quiet early Wednesday and the US Dollar Index consolidates its weekly losses slightly above 103.00. Ahead of Thursday’s highly-anticipated Consumer Price Index (CPI) data from the US, the 10-year Treasury note auction in the US will be looked upon for fresh impetus during the American trading hours.
Reflecting markets’ indecisiveness, US stock index futures trade flat on the day and the benchmark 10-year US Treasury bond yield holds steady at around 3.6%. Meanwhile, Euro Stoxx Futures are up modestly and the Shanghai Composite Index looks to close the day virtually unchanged.
While speaking at Riksbank’s International Symposium on Central Bank Independence, FOMC Chairman Jerome Powell refrained from commenting on the policy or the rate outlook on Tuesday. Wall Street’s main indexes, however, managed to end the in positive territory and didn’t allow the US Dollar to recover Monday’s losses.
EUR/USD edged slightly higher and was last seen trading at around 1.0750. On Tuesday, European Central Bank (ECB) Governing Council member Isabel Schnabel said that restrictive monetary policy stance would benefit society over the medium to long run by restoring price stability. On a slightly dovish note, ECB Governing Council member Mario Centeno noted that the current process of interest rates were approaching its end.
The data from Australia showed on Tuesday that Retail Sales rose by 1.4% on a monthly basis in November following October’s 0.2% contraction. This reading came in higher than the market expectation for an increase of 0.6%. Additionally, the Consumer Price Index (CPI) rose to 7.4% on a yearly basis in November from 6.9% in October. AUD/USD gained traction following these data releases and was last seen trading in positive territory above 0.6900.
A quarterly survey by the Bank of Japan (BoJ) showed on Wednesday that the ratio of Japanese households expecting prices to rise a year from now stood at 85.0% in December, down from 85.7% in September. USD/JPY showed no reaction to this headline and was last seen trading flat on the day at around 132.30.
GBP/USD made a technical correction and registered small losses on Tuesday. The pair holds its ground early Wednesday and trades near 1.2170.
Rising US Treasury bond yields limited XAU/USD’s upside on Tuesday. With the 10-year US T-bond yield struggling to build on its recent upside, however, Gold price regained its traction and was last seen trading at its highest level in nearly eight months above $1,880.
Bitcoin benefited from the improving risk mood and climbed to a fresh multi-week high near $1,7500 on Tuesday before going into a consolidation phase at around $17,400 on Wednesday. Ethereum rose for the third straight day on Tuesday and was last seen trading flat on the day at $1,330.