The EUR/USD Pair Keeps Trading Above $1.06, The USD/JPY Is Below 132
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The USD gets some support from a slight increase in US Treasury yields, supported by the Fed's hawkish outlook. In fact, the US central bank has announced that it will continue to raise interest rates to suppress inflation. Moreover, the Bank of Japan's policy modification that sparked a sell-off in bond markets on Tuesday is acting as wind in the sails for US bond yields.
Market participants are now awaiting economic data from the United States, including the release of the Consumer Confidence Index.
EUR/USD
The euro holds its level above $1.06, and today the mood is bearish. The current pair is trading below 1.0620.
The US dollar is regaining some positive traction and reversing some of the overnight sharp decline which is seen as a headwind for the EUR/USD pair.
Wednesday morning kicked off with German GfK consumer confidence data (see economic calendar below) for January which beat expectations suggestive of a more upbeat outlook for the third consecutive print. With the dollar trading higher today, EUR/USD has managed to utilize this economic data to keep in the green this morning.
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GBP/USD
Cable Market price is down today. At the start of the day, GBP/USD traded above 1.2190 and is currently trading at 1.2130.
The US Dollar regains some positive traction and turns out to be a key factor acting as a headwind for the GBP/USD pair.
On the other hand, the British pound is weakened by the dovish outcome of last week's Bank of England (BoE) meeting.
The US Economic Report includes the Conference Board's Consumer Confidence Index, due to be released later during the early North American session. This, along with US bond yields and broader market sentiment for risk, will weigh on USD price dynamics and provide some impetus to GBP/USD. After that, the focus will shift to the publication of final UK GDP figures for Q3.
AUD/USD
The Aussie Pair trading rebounds below $0.67 today. It is currently above 0.6675.
The Aussie and The Kiwi (NZD) are among the most liquid of these carry trades and took the biggest hit when the BOJ badly wrong-footed a very thin market in the week before Christmas.
A good recovery in global risk attitudes – indicated by the optimistic tone in equity markets – is seen as a key factor supporting the perception of riskier Australians. That said, the appearance of some US dollar purchases limits any significant gains for the AUD/USD pair.
USD/JPY
The USD/JPY Pair is currently trading at June levels. Latest data helped Yen with effect on USD/JPY trading level in range 131.73-131.76
The bears of the pair are waiting for a return to the downtrend
The currency pair remains vulnerable amid mixed comments from Japanese authorities about the Bank of Japan's surprising policy move
The Bank of Japan kept the policy equilibrium rate at -0.10% but adjusted its Yield Curve Control (YCC) by setting a range of +/- 0.50% around zero for Japanese government bonds (JGB) for up to 10 years. Previously, the YCC target was +/- 0.25% around zero.
The bond market had been moving into the upper 0.25% band for some time amid speculation that the bank would have to step down at some point in the face of accelerating inflation. BoJ Governor Haruhiko Kuroda remained steadfast in preparations for yesterday's meeting that the policy would be resolutely upheld.
Source: investing.com, dailyfx.com, finance.yahoo.com
