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Forex Today: US Dollar clings to modest recovery gains ahead of mid-tier data

Here is what you need to know on Tuesday, January 31:

The US Dollar holds steady above 102.00 early Tuesday after having closed the last three trading days in the positive territory. Following the risk-off action on Monday, markets remain cautious with US stock index futures trading modestly lower on the day. Eurostat will release the fourth-quarter Gross Domestic Product (GDP) for the Eurozone. Later in the day, November GDP data from Canada, US CB Consumer Confidence Index and the US November Housing Price Index figures will be featured in the US economic docket.

Earlier in the day, the International Monetary Fund (IMF) announced that it expect the global economy to grow by 2.9% in 2023 and 3.1% in 2024 amid falling gas prices and the China re-opening. Meanwhile, the data from China revealed that the NBS Manufacturing PMI rose to 50.1 in January and the Non-Manufacturing PMI improved to 54.4 from 41.6 in December. Both of these readings came in better than analysts' estimates but the Shanghai Composite Index struggled to gain traction. 

The Australian Bureau of Statistics reported that Retail Sales declined by 3.9% on a monthly basis in December, missing the market expectation for a decrease of 0.3% by a wide margin. On a positive note, Reuters reported that the trade ministers of Australia and China were scheduled to hold a virtual meeting next week. Nevertheless, AUD/USD turned by south pressured by the disappointing data and was last seen losing 0.4% on the day at 0.7030.

NZD/USD stays on the back foot and trades in negative territory near 0.6450. During the Asian trading hours, New Zealand’s new Prime Minister (PM) Chris Hipkins announced a Cabinet reshuffle and caused the NZD to lose interest.

EUR/USD closed in negative territory on Monday and seems to have gone into a consolidation phase near 1.0850 in the early European morning. The data from Germany revealed that Retail Sales decreased by 5.3% in December following the 1.9% increase recorded in November. 

GBP/USD is having a difficult time staging a rebound following Monday's decline and was last seen trading flat on the day at around 1.2350.

Gold price came under renewed bearish pressure early Tuesday and touched its lowest level in a week near $1,910. The benchmark 10-year US Treasury bond yield holds steady above 3.5% after having gained more than 1% on Monday, not allowing XAU/USD to erase its losses. 

USD/JPY fluctuates in a tight channel slightly above 130.00. Japan's Finance Minister Shunichi Suzuki said that wage increases were important to both the government and the Bank of Japan (BoJ). “It is too early to judge whether the joint statement needs to be revised,” the minister added but these comments failed to trigger a market reaction.

Bitcoin lost nearly 4% on Monday and seems to have settled below $23,000 early Tuesday. Ethereum failed to build on Sunday's gains and fell 5% on the first trading day of the week. ETH/USD, however, holds comfortably above $1,500.

Author

Eren Sengezer

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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