Forex Today: US Dollar benefits from risk averse mood

Valeria Bednarik FXStreet

What you need to take care of on Tuesday, January 31:

The US Dollar posted a modest advance at the beginning of the week, backed by a dismal market mood. The Greenback retains its positive bias ahead of the Asian opening, although caution dominates the scenes as the macroeconomic calendar offers multiple first-tier events this week.

Early on Tuesday, Australia will release December Retail Sales, foreseen down by 0.3% in the month. Additionally, China will unveil the NBS Manufacturing and Non-Manufacturing PMIs. The first is expected to improve from 47 in November to 49.7, while services output is foreseen jumping from 41.6 to 51.

Between Wednesday and Thursday, the US Federal Reserve, the European Central Bank and the Bank of England will unveil their monetary policy decisions. At the time being, market players are betting on a 25 basis points (bps) rate hike. For the ECB, a 50 bps rate hike is fully priced in, while the BoE is expected to hike its benchmark rate by 50 bps.

Earlier in the day, the focus was on the Bank of Japan, as a panel of academics and business executives urged the BoJ to make its 2% inflation target a long-term goal. The proposal reportedly also included the need to have interest rates rise more in line with economic fundamentals and normalize Japan's bond market function. BOJ Gov Haruhiko Kuroda stated that its biggest responsibility was price stability and reiterated it is possible to achieve 2% inflation with wage growth and the current easy policy. USD/JPY declined to 129.19 but ended the day at around 130.50 amid broad US Dollar demand.

EUR/USD briefly traded above 1.0900 but settled at around 1.0840. European data failed to impress as the German economy grew at an annualized pace of 1.1% in the last quarter of 2022, missing expectations of 1.3%. Also, as reported by the Harmonized Index of Consumer Prices (HICP), Spanish inflation unexpectedly rose by 5.8% YoY in January, an alarm bell ahead of the ECB monetary policy meeting later this week.

GBP/USD is down to 1.2340, while AUD/USD hovers around 0.7050. The USD/CAD pair advanced towards the current 1.3390 price zone.

Spot gold eased modestly and currently trades at around $1,922 a troy ounce. Crude oil prices edged sharply lower, with WTI currently hovering around $77.70 a barrel.

Ripple Price Forecast: XRP in dire need of nearby support in order to avoid imploding

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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.

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