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The dollar traded around seven-month lows on Friday as a plethora of data worries investors that an economic slowdown may be inevitable.
Today's day in the economic calendar is quite calm, apart from the events from the economic forum in Davos and statements of the Fed (Waller, Harker). Next week, however, we'll get our first look at the US GDP figures, which are crucial to the outcome of the "soft landing" the Fed hoped for as it continued to tighten financial conditions to bring down inflation. Markets expected a smaller tightening from the Fed after US retail sales revealed their lowest level of activity in the last 12 months.
The Japanese yen fell today despite the December CPI data. Further selling pressure around the Japanese yen lifts USD/JPY Pair to fresh daily highs. On the daily chart, USD/JPY is in an uptrend and is approaching 130.00.
The 10-year Japanese government bond (JGB) yield fell below 0.40% today, well below the Bank of Japan's 0.50% ceiling that remained unchanged at its meeting earlier this week.
The pound fell on Friday after weak retail sales data reminded investors about the gloomy outlook for the British economy. The cable pair started the day close to 1.24, but reports caused a weakening and a change of direction. The pair is currently trading below 1.2360.
UK CPI data showed yesterday that there was an increase in inflation in services and an acceleration in food/beverage prices, which will be a cause for concern for decision makers at the Bank of England.
The poor economic outlook in the UK fuels speculation that the BoE may be less hawkish on policy than previously expected.
Retail volumes are down 1% since November, pointing to a challenging environment for consumers as the cost of living continues to be reduced.
EUR/USD holds slight gains while trading above 1.0800 in European trading. The US dollar is trying to rebound alongside US Treasury yields, despite an improved risk profile.
Looking ahead, EUR/USD traders should pay attention to ECB President Lagarde's speech and recent speeches from Fed policy makers. ECB's Lagarde reiterates that the central bank will continue to raise rates.
The recent gains of the major currency pair can be linked to the broad weakness of the US dollar, as well as the optimism surrounding the old continent, namely the Eurozone.
Today, the major currency pair EUR/USD traded mostly in the range of 1.0830-1.0847. Currently, the EUR/USD pair is below this range at 1.0820.
AUD/USD is down sharply for the second day in a row, and the risk of continued decline has increased with the pair below 0.6930. The sentiment-linked Australian dollar has underperformed its major counterparts over the past 24 hours.
The Australian was weighed down by local data on Thursday, which showed Australian employment unexpectedly fell in December, spurring a bond rally as markets priced in a lower interest rate peak from the Reserve Bank of Australia. The focus is now on the quarterly inflation report next Wednesday. Economists expect consumer prices to increase by 7.5% in the fourth quarter of last year compared to last year.
Source: investing.com, finance.yahoo.com, dailyfx.com
