Forex Today: Risk flips positive in US session, NZD takes top spot

Ross J Burland FXStreet

Here is what you need to know on Wednesday, December 22:

The high beta forex space was bid on the day following strong gains in the European equities space that followed through into the US eventually. The antipodeans (AUD+0.61%, NZD +0.84%) and GBP (+0.45%) were performing well throughout early trade and continued to recover from the prior days of supply. The yen and CHF were the worst performers but still managed to end higher vs the greenback.

As for the US dollar, this was only modestly lower against its major trading partners as markets awaited a deluge of US data on Wednesday and Thursday before the Friday holiday. The DXY index ended down 0.02% despite the US 10-year yields ending 3.7% higher.

Late in the day, US President Joseph Biden addressed the nation at 2:30 pm ET and detailed further efforts to combat the rise of COVID-19 cases. There were no surprises in the speech as the White House had already suggested that lockdown measures are not being considered at this point. Biden confirmed this and encouraged everyone to get vaccinated as soon as possible.

The relatively light data schedule for Tuesday included the current account deficit for Q3, the Philadelphia Fed's nonmanufacturing index for December and weekly Redbook retail sales.

A decline in the Philadelphia Fed's Mon-Manufacturing index to 28.3 in December from 46.1 in November highlighted the light data schedule. The other services data already released for December have shown solid growth despite rising COVID-19 cases. The ISM's national reading will be released on January 5.

Meanwhile, the current account deficit widened to $214.77 billion in the third quarter from $198.32 billion in the previous quarter. Redbook reported that US same-store Retail Sales were up 16.4% year-over-year in the week ended December 18, larger than a 16% gain in the prior week.

The data schedule will get busier on Wednesday and Thursday before the holiday on Friday. Looking ahead, Gross Domestic Product growth, Consumer Confidence and Existing Home Sales reports will be released on Wednesday. Personal income and spending, Initial Jobless Claims and New Home Sales releases are scheduled for Thursday.

In US equities, at 20.00GMT, the Dow Jones Industrial Average rose 1.5% to 35,505, the S&P 500 increased 1.67% to 4,645, and the Nasdaq Composite was up 2.22% to 15,975.

In the crypto space, upbeat risk drove investors to seek riskier assets whereby the bonds were sold-off. Subsequently, Bitcoin climbed above the 10-DMA, piercing the trend line of the November peak and adding 3.7% on the day to a high of $49,353.49.

However, the monthly chart leans bearish and the RSI drop implies that there is still downside momentum. With that being said, bulls will target a break above $53,000/$54,000 where the 100-DMA is located that will give longs greater control.

Commodities were bid with the CRB index higher by over 2% with US oil, the largest component of the index and as measured by WTI spot ended around 3.2% higher. Copper was 1% higher

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

GBP/USD remains slightly bid near 1.3300

GBP/USD now advances marginally and manages to dispute the 1.3300 region on Tuesday. Indeed, Cable regains some balance on the back of the lacklustre performance of the Greenback, all preceding the Fed’s meeting on Wednesday and the BoE’s gathering on Thursday.

EUR/USD recedes from tops, back below 1.1400

EUR/USD manages to set aside part of the recent weakness and clinches decent gains on Tuesday. Indeed, spot keeps the trade below the 1.1400 mark amid acceptable losses in the US Dollar, all following rising optimism of a US-Iran deal and steady caution prior to the FOMC gathering on Wednesday.

Gold bounces on poor US data

Gold remains under marked downside pressure on Tuesday, although the $4,000 zone per troy ounce emerges as a decent support for now. The precious metal’s pullback comes despite the modest losses in the US Dollar in a context of easing geopolitical tensions ahead of the key Fed event on Wednesday.

Australia CPI could boost Aussie if inflation arrives above 4%

The Australian Bureau of Statistics will publish the June Consumer Price Index on Wednesday at 01:30 GMT. The report is expected to show that inflation rose 4% from a year earlier, matching the May reading. The monthly CPI is foreseen at 0.2% following the -0.7% print from May. The ABS will also release the Trimmed Mean CPI, the Reserve Bank of Australia’s favorite inflation gauge.

Indian Rupee outlook: Downtrend set to persist – Just at a slower pace

The Indian Rupee just endured its most brutal six-month stretch in years, battered by a perfect storm of global shocks. From United States-India trade uncertainty to surging Oil prices and the significant outflow of Foreign Institutional Investment from the Indian stock market, every event brought nothing but pain for the Indian currency.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.