Cable Market Is Trading Near 1.2000, USD/JPY Is Above 132, EUR/USD Holds Trade Above 1.06
Aa
Share
The dollar was more or less flat in choppy trading on Thursday after the Federal Reserve's closing minutes were released.
The FOMC minutes repeated the message of a critical fight against inflation, more rate hikes ahead and no forecasts for 2023. The Fed publication reminded markets that policymakers do not anticipate a rate cut in 2023 and want to see "much more evidence" of progress to conclude that inflation is on a downward path.
Analysts said the protocols were broadly in line with expectations, explaining the markets' relatively subdued reaction.
A higher-than-expected JOLT reading of 10.45 million job vacancies in November and the ISM Manufacturing PMI survey triggered a rebound in the US dollar (DXY) index. Although the headline PMI fell slightly in December, the employment index in the PNI report unexpectedly rose to 51.4 from 48.4 in November. Meanwhile, the hawkish tone in the minutes of the December Federal Reserve meeting provided additional support for DXY.
Looking ahead, the market will be watching the US employment data today to decipher the potential implications for the Fed at its next meeting in February.
It's worth watching future reports. Private ADP employment figures will be released tomorrow ahead of NFP figures and on the EU side EU inflation figures will be released tomorrow after Italy showed slightly lower inflation readings in monthly and yearly comparisons. Next week, the US inflation data for December will be watched closely as the Fed continued to stress the impact of inflation on market disbelief as another lower printout would mean a sixth consecutive cooler printout for the headline and third for the core indicator.
USD/JPY
The Japanese yen trimmed losses from the previous session against the US dollar.
On the Tokyo front, the Japanese yen witnessed a sharp decline after BJ Governor Haruhiko Kuroda advocated further policy easing to push the wage price index to meet elevated inflation projections for 2023 and 2024.
The currency and commodity markets started the year with a break in volatility.
Japan relies heavily on imports for most of its energy, and with crude oil down about 9% in the last few days, the yen could be the beneficiary of this move.
In addition to the yen, the US dollar was weakened during the New York close but has since recovered some of those losses.
The USD/JPY pair managed to exceed the level of 132 in the Asian session. It looks like the pair will be headed in the direction of 133 in the near future.
GBP/USD
GBP/USD traded slightly lower in the early hours of Europe on Thursday and fell towards 1.2000.
The UK services PMI rose close to breakeven in December, suggesting little change in activity this month.
EUR/USD
EUR/USD keeps trading above 1.0600, but a drop below is still possible.
The fundamental landscape surrounding the euro area economy has changed slightly compared to the first three quarters of 2022 and this is largely due to the significant reduction in oil and gas prices, which has brought a huge relief to the bulk importer of these commodities.
From today's data from europe, the PPI report is expected. The European Economic Report will include a Producer Price Index (PPI), but that data is unlikely to trigger a significant reaction, especially ahead of Friday's Eurozone Inflation Report.
AUD/USD
The Aussie Pair keeps its trade above 0.68 despite being closer to 0.68 than 0.69.
The Australian dollar soars as traders boost economic confidence in China
Most of the AUD's gain took place during Wednesday's trading session in the Asia-Pacific region. At the time, investors likely priced in the potential economic impact of future trade flows between Australia and China due to several developments.
Source: dailyfx.com, finance.yahoo.com, investing.com
