Forex Today: US Dollar recovery loses steam ahead of high-tier data

Eren Sengezer FXStreet

Here is what you need to know on Wednesday, January 3:

The US Dollar (USD) gathered bullish momentum and outperformed its rivals on the first trading day of 2024 as the market mood soured. After rising nearly 1% on Tuesday, the USD Index seems to have stabilized above 102.00 early Wednesday. November JOLTS Job Openings and December ISM Manufacturing PMI data will be featured in the US economic docket. Later in the American session, the Federal Reserve (Fed) will release the minutes of the December policy meeting.

US Dollar price this week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Swiss Franc.

	USD	EUR	GBP	CAD	AUD	JPY	NZD	CHF
USD		0.88%	0.75%	0.59%	0.73%	0.74%	0.77%	1.11%
EUR	-0.73%		0.03%	-0.13%	-0.01%	-0.14%	0.04%	0.30%
GBP	-0.75%	-0.02%		-0.14%	-0.02%	0.07%	0.03%	0.29%
CAD	-0.60%	0.10%	0.33%		0.09%	0.13%	0.16%	0.44%
AUD	-0.73%	0.00%	0.03%	-0.15%		-0.18%	0.04%	0.34%
JPY	-0.73%	0.17%	0.08%	0.06%	0.18%		0.23%	0.31%
NZD	-0.81%	-0.05%	-0.03%	-0.18%	-0.06%	-0.22%		0.25%
CHF	-1.03%	-0.29%	-0.26%	-0.41%	-0.28%	-0.31%	-0.23%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

The benchmark 10-year US Treasury bond yield rose toward 4% and provided a boost to the USD on Tuesday as trading conditions normalized. Meanwhile, Wall Street's main indexes opened in negative territory and the Nasdaq Composite Index fell more than 1.5%. Early Wednesday, the 10-year US yield holds steady at around 3.95% and US stock index futures trade marginally lower.

EUR/USD came under technical selling pressure after dropping below 1.1000 and touched its lowest level in nearly two weeks at 1.0938 on Tuesday. The pair stays in a consolidation phase slightly above 1.0950 in the European morning on Wednesday. Germany's Destatis will release Unemployment Rate data for December.

GBP/USD lost more than 100 pips on Tuesday and came within a touching distance of 1.2600 before staging a modest rebound. The pair was last seen trading modestly higher on the day at around 1.2650.

USD/JPY rallied on Tuesday, fuelled by rising US yields and broad USD strength. The pair lost its bullish momentum during the Asian trading hours and started to move sideways near 142.00.

USD/CAD rose sharply on Tuesday and stabilized above 1.3300 early Wednesday. In addition to the upbeat performance of the USD, falling Crude Oil prices helped the pair push higher by weighing on the commodity-sensitive Canadian Dollar.

After rising toward $2,080 on Tuesday, Gold reversed its direction in the American session and closed the day virtually unchanged near $2,060 on Tuesday. XAU/USD holds steady and fluctuates in a narrow band slightly above $2,060 in the European morning.

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.

AUD/USD holds firm near 0.7000 after Chinese inflation, trade data

AUD/USD stays firm near 0.7000 in Wednesday’s Asian session, picking up some bids after China's mixed inflation and upbeat trade data. CPI rose less than expected in September, while PPI inflation picked up. Meanwhile, the Chinese trade surplus unexpectedly widened in September. The pair remains underpinned by a broadly subdued US Dollar, despite the Middle East escalation, as focus remains on US CPI data.

USD/JPY consolidates near 158.50; looks to US CPI for fresh impetus

USD/JPY stays range-bound near 158.50 in the Asian session on Wednesday, with looming intervention risks supporting the Japanese Yen and capping upside amid a softer US Dollar. However, geopolitical uncertainties act as a tailwind for the safe-haven USD and the pair. Traders also seem hesitant ahead of the release of the latest US inflation figures.

Gold drifts lower with US CPI, Fed speakers in focus

Gold extends losses on Wednesday, despite the lower US Treasury yields, with investors looking from the sidelines ahead of the release of September’s US Consumer Price Index report and speeches from Federal Reserve officials due later in the day. The XAU/USD pair has retreated below the $4,150 level after rejection at the $4,200 area on Monday, with technical indicators showing building bearish momentum.

XRP recovery faces headwinds despite Ripple and Meritz Securities' tokenization push in Korea

XRP trades above $1.36 as bulls gather momentum to face a critical supply range toward $1.40. Ripple and Meritz Securities partner to explore institutional custody and tokenization services for South Korea’s capital markets.

US CPI data expected to rise in September as markets reassess Fed rate outlook

The US Bureau of Labor Statistics will publish the September Consumer Price Index (CPI) data on Wednesday. The report is expected to show a further increase in headline prices and a small uptick in annual core inflation. Any divergence from analysts’ estimates could influence the Federal Reserve’s policy outlook and impact the US Dollar’s valuation.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?