First Trading Day Of 2023: GBP/USD Is Trading 1.2051, USD/JPY Pair Below 131, The Aussie Pair Is Around 0.68 And EUR/USD Above 1.0680
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Central banks and inflation remain the focus of the markets, as well as signals indicating how long and deep the recession may turn out to be.
The Euro area economy also heading into recession, concerns over winter gas supplies have eased meaning the slowdown may not be as severe as feared just a few months ago.
The first trading day of the year was subdued with many countries, including major shopping malls such as the UK and Japan, closed for the holidays.
The dollar strengthened on Monday, moving away from its recent six-month lows against a basket of major currencies for the time being.
This week, the critical event that will support the USD Index in gauging a decisive move will be the release of the Federal Open Market Committee (FOMC) minutes. The FOMC minutes will provide a detailed explanation of December’s monetary policy decision.
Once trading conditions normalize and major markets return to operation on Tuesday, safe harbor flows could begin to dominate financial markets. In this scenario, the US dollar is likely to hold its ground against its risk-sensitive rivals.
USD/JPY
The USD/JPY pair is trading below 131 on the daily chart. It is trading in a narrow range of 130.75-130.80.
On the Tokyo front, clear inflation projections for the next two years by the Bank of Japan (BOJ) are supporting the Japanese Yen.
GBP/USD
The cable pair is trading at 1.2051 at the time of writing. On the daily chart, the pair is moving in a narrow range.
Following the modest rebound witnessed on the last trading day of 2022, GBP/USD came under subtle bearish pressure and declined toward 1.2050 on the first trading day of 2023. Nevertheless, trading action remains relatively subdued in the absence of data releases.
EUR/USD
After falling towards 1.0650 in the early morning hours in Europe on Monday, EUR/USD managed to rebound towards 1.0700. Thanks to Friday's increases, the pair closed the previous six weeks in the black. Currently, the pair is trading in a range below 1.07, to be precise 1.0686
Meanwhile, the S&P Global manufacturing PMI for the Eurozone was 47.8, in line with market expectations and preliminary estimates.
On the negative side, Germany's S&P Global Manufacturing PMI was 47.1, slightly below the initial estimate of 47.4.
In the rest of the day there will be no publication of important macroeconomic data. Eurozone and US bond and equity markets will be closed for the New Year holiday, suggesting EUR/USD is likely to trade in a narrow channel in the second half of the day.
AUD/USD
Similarly to the euro, the Australian failed to maintain the high level seen at the end of the year. Today, it mostly traded above 0.68, but has now fallen below that level. Trading just below 0.68, at 0.6798
Source: investing.com, finance.yahoo.com
