The Aussie Pair Is Gaining Strong Positive Traction Agian, USD/JPY Drops Below 130.00
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The dollar gained on Wednesday during limited trading. Traders broadly expect the Fed to raise interest rates by 25 basis points next Wednesday, down from the 50 bp hike in December. Earlier, investors will look at the US economic growth data for the fourth quarter, which will be released on Thursday.
Moreover, a drop in global energy prices and a resulting slowdown in inflation in advanced economies has spurred speculation the Fed and other central banks might soon stop raising interest rates.
USD/JPY
Spot prices struggle to capitalize on the move and held steady at 130.00 through the early European session. USD/JPY is trading below this level.
EUR/USD
The chances of a bigger interest rate hike by the ECB are growing rapidly. As reported by Bloomberg, ECB policymaker Gediminas Simkus reiterated on Tuesday that the ECB should continue raising interest rates by 50 basis points in the face of mounting wage pressure.
The euro gained thanks to optimism about the euro zone's economic prospects.
As for the future of the euro, economists at CIBC Capital Markets said the improving macroeconomic situation and further policy tightening by the ECB herald the strength of the euro in 2023.
During the Asian trading hours, the EUR/USD pair rose until it broke above the 1.0900 level. The momentum fails to sustain and the pair trades below that level at around 1.0870.
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AUD/USD
The Aussie pair is gaining strong positive traction for the fourth day in a row and is recovering from 0.7100 for the first time since mid-August during the Asian session on Wednesday.
The Australian dollar rose to a more than five-month high on Wednesday after higher-than-expected inflation data, bolstering the case for further interest rate hikes.
Australian headline inflation (CPI) continues to pick up, as does the preferred trimmed CPI, on both a month-on-month and year-on-year basis.
Australia is set to benefit from the Chinese reopening now that the Chinese government has stated that the nation has already reached a peak in infections and hospitalization rates. The reopening has resulted in increased purchases of Australia’s top export, iron ore, as prices have trended higher.
The daily AUD/USD chart shows this pair in an uptrend. The pair managed to record gains over the course of three consecutive days. The AUD/USD pair performed well in the early stages of 2023, driven in large part by the continued downtrend of the dollar. Today, the pair gained above 0.7100, but failed to hold and is below this level again.
GBP/USD
Details of the UK Producer Price Index (PPI) for January may be of interest to GBP/USD investors ahead of Thursday's key US Q4 GDP and next week's Fed meeting.
Sterling fell against the dollar and euro on Wednesday after data showed British manufacturers unexpectedly lowered prices in December, suggesting inflation could be easing ahead of next week's Bank of England policy meeting.
The news that UK factories have lowered prices is likely to ease the burden on Bank of England policymakers who need to consider how far to raise interest rates in the fight to bring down inflation.
The market expects the BoE to raise interest rates for the tenth time since late 2021 as it fights inflation. Markets are currently evaluating a 75% chance of a 50 point rate hike.
The cable pair is still trading below 1.2400, close to the 1.2300 level.
Source: finance.yahoo.com, investing.com
