Here is what you need to know on Wednesday, February 8:
The US Dollar Index snapped a three-day winning streak on Tuesday after having fluctuated wildly with the initial reaction to FOMC Chairman Jerome Powell's comments on the policy outlook. In the absence of high-impact macroeconomic data releases, comments from Fed officials, including New York Fed President Williams, Atlanta Fed President Bostic and Minneapolis Fed President Kashkari, will be watched closely by market participants on Wednesday.
In an interview with The Economic Club of Washington, D.C., Powell said that the latest jobs report was certainly stronger than anyone expected and reiterated that they will probably need to do further interest rate increases. The chairman also noted that he expects 2023 to be a year of 'significant declines' in inflation. "We may need to do more if we continue to get strong labour market or higher inflation reports," Powell concluded. During Powell's speech, the US Dollar Index moved up and down in a wide range but ended up closing the day modestly lower.
Meanwhile, US President Joe Biden said in his second State of the Union address that he proposes to quadruple the tax on corporate stock buybacks and called on Congress to pass his proposal for a billionaire minimum tax. Wall Street's main indexes showed no reaction to these comments and registered strong daily gains following the uninspiring start to the week.
During the Asian trading hours, Fitch Ratings announced that it revised 2023 Gross Domestic Product Growth for China to 5% from 4.1%. "We believe the economic recovery will be primarily consumption-led, as households re-engage in activities previously hampered by health controls," Fitch elaborated.
US stock index futures trade virtually unchanged early Wednesday and the benchmark 10-year US Treasury bond yield posts small daily losses at around 3.65%.
EUR/USD dropped to its lowest level since January 9 at 1.0667 on Tuesday but managed to close the day above 1.0700 with the US Dollar struggling to preserve its strength in the late American session. The pair trades marginally higher on the day early Wednesday but stays below 1.0750.
GBP/USD registered small daily gains on Tuesday and seems to have gone into a consolidation phase at around 1.2050 in the European morning on Wednesday.
USD/JPY lost more than 100 pips on Tuesday and has settled slightly above 131.00. Japanese Prime Minister (PM) Fumio Kishida said earlier in the day that they are in the process of choosing the next Bank of Japan (BoJ) Governor nominee.
Following Tuesday's rebound that was fueled by the Reserve Bank of Australia's (RBA) hawkish tone, AUD/USD stays relatively quiet below 0.7000 on Wednesday.
USD/CAD closed in negative territory on Tuesday and was last seen moving sideways slightly below 1.3400. Bank of Canada (BoC) Governor Tiff Macklem said earlier in the day that they need time to gauge how households, businesses adapting to higher rates before making further moves.
Gold price registered small gains on Tuesday as it struggled to gather recovery momentum. At the time of press, XAU/USD was flat on the day at around $1,875.
Bitcoin snapped a five-day losing streak and gained more than 2% on Tuesday. BTC/USD stays relatively quiet and trades near $23,200 early Wednesday. Ethereum rose 3.5% on Tuesday and erased the losses from Sunday and Monday. ETH/USD, however, failed to climb above $1,700 at its first attempt and was last seen trading flat on the day at $1,670.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.