Forex Today: Dollar stays under pressure ahead of key US data

Eren Sengezer FXStreet

Here is what you need to know on Friday, January 14:

The US Dollar Index closed the third straight day in the negative territory on Thursday and extended its slide to a fresh two month low near 94.60 early Friday. The slight decline witnessed in the annual Producer Price Index (PPI) on Thursday made it difficult for the dollar to find demand and the benchmark 10-year US Treasury bond yield fell nearly 2%, putting additional weight on the currency. December Retail Sales, Industrial Production data and the University of Michigan's advance Consumer Sentiment Index for January will be featured in the US economic docket.

US December Retail Sales Preview: Can dollar capitalize on upbeat data?

While testifying before the US Senate for her confirmation hearing, Fed Governor Lael Brainard noted that they will be in a position to start lifting rates as soon as the bond purchase program ends. Meanwhile, Fed Governor Christopher Waller said three rate hikes in 2022 was a good baseline and added that the Fed could start shrinking the balance sheet by summer. Although these remarks failed to lift US T-bond yields, the 10-year reference is up more than 1% at 1.72% in the Europen morning, suggesting that the dollar could show some resilience against its rivals ahead of the data releases.

EUR/USD extended its rally on Thursday and continues to push higher toward 1.1500 on Friday. Eurostat will release the November Trade Balance data later in the session but the dollar's market valuation is likely to remain the primary driver of the pair's action.

GBP/USD closed flat near 1.3700 on Thursday but clings to small gains around 1.3730 early Friday. The UK's Office for National Statistics will publish the November GDP, Trade Balance and Industrial Production during the European trading hours.

Gold staged a deep correction and slumped toward $1,810 on Thursday before regaining its traction on falling US T-bond yields later in the day. XAU/USD seems to have started the last day of the week on a firm footing and was last seen posting modest daily gains a little below $1,830.

USD/JPY broke below 114.00 for the first time in three weeks on Thursday and continued to edge lower during the Asian session. On a weekly basis, the pair is down nearly 200 pips.

Bitcoin lost its bullish momentum after testing $44,000 and lost 3% on Thursday before going into a consolidation phase around $43,000. On Thursday, Ethereum erased all the gains it posted on Wednesday but it seems to have found support near $3,200.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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USD/JPY holds gains near 158.00 after Japan's weak Household Spending data

USD/JPY clings to gains around 158.00 after data showed on Friday that Japan's Household Spending fell for the ninth straight month, undermining the Japanese Yen. Meanwhile, the US Dollar remains depressed as the overnight fall in US bond yields counters a hawkish Fed and geopolitical uncertainties, could cap any downside in the pair.

Gold remains range-bound below $4,200

Gold has given up some ground after an initial bullish attempt to reach weekly highs, returning to below the $4,200 mark per troy ounce on Friday. The US Dollar’s strong upside momentum, combined with rising US Treasury yields across the curve, seems to keep further gains in the yellow metal under scrutiny.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?

The Euro is not the sick man of Europe. France's bond market is

EUR/USD remains under pressure, near the 17-month low of 1.1161 reached on Monday. The pair has lost more than 7% since its yearly peak, as concerns over France's public finances increasingly weigh on the single currency. But behind the weakness of the Euro (EUR), the problem does not necessarily lie with the European economy as a whole.