The Aussie Pair Is Above 0.70$, GBP/USD Pair Lost Its Level Of 1.24$
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The dollar traded near a nine-month low against the euro and lost its recent gains against the yen on Tuesday as investors weighed the risk of a US recession with the Federal Reserve's monetary policy outlook.
USD/JPY
The Japanese yen gained slightly against the US dollar today after Jibun Bank's composite PMI was 50.8 in January from 49.7 previously.
The manufacturing component was the same as last month's 48.9, but the services component was 52.4, above the previous reading of 51.1. These are diffusion ratios, and an index above 50 is seen as positive for the economy.
The dollar fell to 127,215 yen last week, the weakest since May, before the Bank of Japan's policy review, as investors assumed the BoJ would begin to end its stimulus program. However, the BJ left the policy unchanged, giving the dollar some respite.
Analysts believe BOJ change will come sooner rather than later as policy makers make tweaks to their yield curve control mechanism.
USD/JPY drops towards 129.00 but rebounded and trades above 130.00 again.
EUR/USD
The eurozone showed resilience in late 2022 with plenty of positive data that so far seemed to carry over to 2023. The hawkish rhetoric of ECB policymakers continues to strengthen the euro while optimism about avoiding recession is growing.
The euro, on the other hand, gained almost 0.8% last week, which was boosted by a wave of officials from the European Central Bank. ECB President Christine Lagarde also reiterated on Monday that the central bank will continue to raise interest rates rapidly to curb inflation, which is still more than five times higher than the 2% target rate.
PMIs in the euro zone were higher than expected. Only Germany's Manufacturing PMI fell from 47.1 to 47.0.
EUR/USD lost grip and fell towards 1.0850 after the release of mixed PMI data from Germany and the euro zone. Ahead of the US S&P Global PMI survey, the US dollar index has been stable above 102.00. The EUR/USD pair is trading close to 1.0870 at the time of writing.
Source: investing.com
GBP/USD
The British pound was lower on Tuesday after data showed economic activity weakened further in January, underlining the risk that Britain could slip into a recession in 2023.
After an impressive December services PMI report, markets were hoping for another encouraging reading in January given a slightly brighter outlook now that inflation seems to be headed in the right direction. This was not to be the case as the new year brought with it a sustained decline in private sector business activity in the UK.
The flash UK PMI Composite was 47.8 (December: 49.0). lowest in 24 months. In contrast, the UK industrial production index was 46.6 (December: 44.4). The highest in 6 months. UK Services PMI Business Activity Index at 48.0 (December: 49.9).
The Bank of England is still expected to raise its key interest rate for the tenth consecutive time on Feb. 2 after its next scheduled meeting.
The cable pair also lost amid emerging reports. GBP/USD pair trades below 1.2400 again and is now at 1.2318
AUD/USD
The Australian dollar was nearing a five-month high from last week at 0.7063 as the US dollar comes under increasing pressure.
While the CPI is the main target of the RBA's mandate of targeting 2-3% over the business cycle, the Producer Price Index (PPI) may also play a role.
The PPI will be released this Friday and if it accelerates in the fourth quarter, it could be a problem for CPI this quarter. Companies face higher costs.
It's also worth noting that the Australian and New Zealand dollars hit multi-month highs on Tuesday as investors refocused on risky assets, easing recession fears and a less aggressive Federal Reserve.
The pair of the Australian Dollar, despite not maintaining previous imports, remains above 0.70. The Aussie Pair is currently trading at 0.7023.
Source: investing.com, fiance.yahoo.com, dailyfx.com
