Forex Today: US Dollar clings to recovery gains in quiet calendar day

Eren Sengezer FXStreet

Here is what you need to know on Tuesday, December 6:

Following Monday's decisive rebound, the US Dollar Index clings to modest daily gains early Tuesday as investors adopt a cautious stance. The 10-year US Treasury bond yield stays in positive territory at around 3.6% in the European morning and US stock index futures trade flat on the day. October Goods Trade Balance will be the only data featured in the US economic docket later in the day. Ivey November PMI from Canada and the GDT Auction from New Zealand will also be looked upon for fresh impetus.

The data published by the ISM revealed on Monday that the business activity in the US service sector expanded at a strengthening pace in November with the Services PMI rising to 56.5 from 54.4 in October. This reading came in better than the market expectation of 53.1 and helped the US Dollar outperform its rivals in the second half of the day. Nevertheless, the CEM Group's FedWatch Tool shows that markets are still pricing in a nearly 80% probability of a 50 basis points (bps) Fed rate hike in December.

During the Asian trading hours, the Reserve Bank of Australia (RBA) announced that it hiked its policy rate by 25 bps to 3.1% as expected. In its policy statement, the RBA noted that policymakers expect to continue to raise rates. Regarding the price developments, the RBA further noted that inflation is forecast to increase over the months ahead. Following Monday's sharp decline, AUD/USD managed to stage a rebound and was last seen trading in positive territory above 0.6700.

Breaking: RBA hikes OCR by 25 bps to 3.10% in December.

Pressured by the renewed US Dollar strength and the risk-averse market atmosphere, EUR/USD ended the day in negative territory below 1.0500 on Monday. The pair stays relatively quiet near Monday's closing level early Tuesday. The data from Germany revealed that Factory Orders rose by 0.8% in October, beating the market expectation for a decrease of 0.2%.

GBP/USD lost more than 50 pips on Monday and seems to have gone into a consolidation phase at around 1.2200 in the European morning on Tuesday. S&P Global Construction PMI will be featured in the UK economic docket but it's unlikely to have a significant impact on the Pound Sterling's performance against its rivals.

With the 10-year US T-bond yield gaining more than 2% on Monday, Gold price turned south and erased a large portion of last week's gains. At the time of press, XAU/USD was moving sideways at around $1,770.

USD/JPY gained more than 100 pips on Monday and continued to push higher in the Asian session on Tuesday. The pair was last seen rising 0.5% on the day at 137.35. Earlier in the day, Bank of Japan (BoJ) Governor Haruhiko Kuroda explained that they will consider exiting the ultra-loose policy once the 2% inflation target is consistently met.

Bitcoin struggled to gain traction on Monday and registered small daily losses. BTC/USD continues to move sideways near $17,000 early Tuesday. Ethereum fell more than 1% on Monday and was last seen consolidating its losses at around $1,250.

Author

Eren Sengezer

FXStreet

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.

EUR/USD climbs to daily highs near 1.1820

EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.

GBP/USD trims losses, retests 1.3460

After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.

Gold flirts with four-week highs past $5,200

Gold extends its rebound, climbing for a third consecutive session and pushing back above the $5,200 mark per troy ounce on Friday. The move higher continues to draw support from lingering geopolitical tensions and the ongoing uncertainty surrounding US trade policy, both of which are keeping safe-haven demand firmly in play.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary.

Changing the game: International implications of recent tariff developments

The Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) tariffs provides limited relief for the rest of the world, with weighted average tariff rates modestly lower.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.