Forex Today: Optimism leads, but would it last?

Valeria Bednarik FXStreet

What you need to know on Wednesday, December 8:

Markets were more active on Tuesday, with optimism leading the way. Hopes that the Omicron coronavirus variant is milder and won’t interrupt the economic comeback sent global equities well into the green. Nevertheless, it’s too early to say how things will turn out with the new COVID-19 strain.

The EUR was the weakest USD rival, while the AUD and the CAD were the strongest. EUR/USD fell to 1.1227, its lowest for December, following the release of unimpressive EU data. The GBP/USD pair neared its yearly low, bouncing modestly ahead of the close to settle at around 1.13230.

EU data failed to impress, as the EU Q3 Gross Domestic Product was confirmed at 2.2% QoQ. On the other hand, the German ZEW showed that Economic Sentiment improved in Germany and the EU in December, although the assessment of the current situation plummeted to -7.4 vs the 5 anticipated by markets.

AUD/USD trades around 0.7110, underpinned by rallying equities and an optimistic RBA. USD/CAD is down to 1.2650, as oil prices kept rallying, with WTI near $72.00 a barrel.

The dollar advanced modestly against safe-haven CHF and JPY, with the pairs confined to tight intraday ranges.

Gold ticked higher but held within familiar levels at around $1,785 a troy ounce.

US Treasury yields surged on the back of the market’s optimism, with the 10-year Treasury note yielding 1.48% by the end of the day.

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

GBP/USD extends the drop to 1.3360

GBP/USD builds on Monday’s decline and briefly clinches five-day lows near 1.3360 on Tuesday. Cable’s extra pullback follows the better tone in the Greenback as uncertainty in the Middle East prompts investors to adopt a cautious stance. Meanwhile, an apathetic UK labour market report also collaborates with the selling pressure on the British Pound.

EUR/USD stays offered just above 1.1400

EUR/USD keeps the downtrend well in place for yet another day, challenging the 1.1400 contention zone on Tuesday. The continuation of the selling impulse in spot comes amid decent gains in the US Dollar, which continues to find support in the persistent effervescence surrounding the US-Iran crisis.

Middle East crisis intensifies, Gold up

Gold now seems to have embarked on a consolidative phase below the key $4,100 mark per troy ounce in the latter part of Tuesday’s session. Meanwhile, uncertainty surrounding the Middle East conflict and rising expectations for a hawkish Fed policy outlook are expected to limit the precious metal’s bullish momentum in the near term.

XRP rebounds on rising on-chain activity

Ripple (XRP) ticks up and trades around $1.13 at the time of writing on Tuesday. This rebound aligns with a broader recovery in the cryptocurrency market, attributed to reports that mediators between the United States (US) and Iran are seeking a 10-day cessation of strikes to find a way back to the signed Memorandum of Understanding (MoU).

The Iranian war has again risen

The Iranian war has again risen to the top of the economics factor list. There is no end in sight. Intelligence experts say the current level of offense/retaliation will not change minds in Tehran, while in Washington, Trump fears all-out war, which would mean boots on the ground.

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