Forex Today: Markets recovering from Mid-East shock, Bitcoin shoots higher, US data eyed

Yohay Elam FXStreet

Here is what you need to know on Tuesday, January 7:

Middle East: The market mood has improved after several tense days. Oil prices are sliding while stocks are on the rise. Gold is holding onto some of its gains. The US has denied the Iranian foreign minister entrance to the US for the UN assembly. Uncertainty about a potential US retreat from Iraq has caused confusion about the next moves.

Trade: Reports that China will refrain from boosting quotas on agriculture purchases from the US have weighed on sentiment. The world's largest economies are set to sign Phase One of the trade deal next week.

Eurozone inflation figures for December are set to show a pickup headline Consumer Price Index with Core CPI holding onto the highs at 1.3%. On Monday, Markit's Services Purchasing Managers' Indexes beat expectations.

See Eurozone inflation preview: Highest core CPI since 2013 may send EUR/USD higher

The US ISM Non-Manufacturing PMI for December is forecast to show an increase in December, contrary to the disappointing figures for the manufacturing sector. The figure serves as a hint toward the Non-Farm Payrolls. Factory Orders are also of interest.

See ISM Non-Manufacturing PMI Preview: Last call for the concerned?

Brexit: Parliament is returning from the holidays and is set to advance the passage of the Withdrawal Agreement.

Cryptocurrencies have been advancing, with Ripple's XRP leading the charge on Monday and Bitcoin advancing later on and touching $8,000.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD flirts with 0.7000, lowest since early August amid bullish USD

AUD/USD hits a fresh low since early August during the Asian session on Friday and looks vulnerable near 0.7000 after breaking below the 200-day SMA overnight. Against the backdrop of the hawkish Fed, a two-day rally in oil prices revives inflation fears and continues to push US bond yields to multi-year highs. Adding to this, geopolitical risks lift the US Dollar to a two-month high, overshadowing RBA rate hike bets and weighing on the pair.

USD/JPY pulls back from three-week high after failing near 159.00

USD/JPY edges lower during the Asian session on Friday, stalling its recent strong move to a three-week high of 159.00 as Japanese Yen bears turn cautious amid intervention fears. Meanwhile, the US Dollar retains a strong bullish undertone as the Fed's hawkish outlook and oil-driven inflation fears continue to push US bond yields to multi-year peaks. Furthermore, the BoJ's dovish rate hike last week might cap JPY and support spot prices.

Gold treads water below $4,300

Gold grabs some buying attention and advances marginally at the end of the week, partially retracing the weekly decline, although it is still navigating below the key $4,300 mark per troy ounce. The fresh selling bias on the Greenback and the modest decline in US Treasury yields appear to support the humble advance in the precious metal.

Crypto Today: Bitcoin and Ethereum edge lower, XRP extends recovery as macro headwinds weigh

The broader cryptocurrency market is consolidating on Friday, with Bitcoin paring losses slightly above $84,000. Ethereum declines in tandem with BTC. Ripple (XRP), meanwhile, paints a different picture.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Federal Reserve (Fed) and the Bank of Japan (BoJ) have just done something remarkably similar. Both central banks raised interest rates by 25 basis points (bps) last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.