Forex Today: US Dollar weakens to start last trading week of 2022

Eren Sengezer FXStreet

Here is what you need to know on Tuesday, December 27:

Following the three-day weekend, the US Dollar struggles to find demand on Tuesday with the US Dollar Index trading in negative territory below 104.00 following a bearish gap at the opening. November Goods Trade Balance and October Housing Price Index data will be featured in the US economic docket later in the day. US stock index futures trade in positive territory and the 10-year US Treasury bond yield holds steady near above 3.75%.

Earlier in the day, China’s National Bureau of Statistics (NBS) said that they had revised the country’s estimate of 2021 gross domestic product (GDP) growth to 8.4% from 8.1% previously. On a concerning note, reports suggest that China's hospitals are overwhelmed with the number of confirmed coronavirus cases rapidly rising since the country took steps to ease restrictions. Meanwhile, Japan Prime Minister Fumio Kishida announced on Tuesday that they will be requiring travellers from China to quarantine for seven days if they test positive for COVID-19 and added that they will be placing limits on airlines' requests to increase flights to China.

Nevertheless, the relatively upbeat risk mood stays intact in the European morning, making it difficult for the safe haven US Dollar to stay resilient against its rivals. Ahead of the Christmas holiday, the US Bureau of Economic Analysis reported that the Core Personal Consumption Expenditures (PCE) Price Index rose by 0.2% on a monthly basis, brining the annual rate down to 4.7% from 5% in October. Both of these readings came in line with analysts' forecasts.

EUR/USD capitalized on the selling pressure surrounding the US Dollar and climbed above 1.0650 in the European morning on Tuesday.

After having fluctuated in a narrow range during the Asian trading hours, GBP/USD started to stretch higher and was last seen trading above 1.2100.

USD/JPY stays relatively quiet below 133.00 despite the US Dollar weakness. Earlier in the day, Bank of Japan (BOJ) Governor Haruhiko Kuroda said that the decision to tweak the yield curve control strategy was "absolutely no a first step" towards an exit from ultra-loose monetary policy, making it difficult for the Japanese Yen to find demand.

Gold price edges higher during the European trading hours and trades above $1,807 after having opened with a small bullish gap.

Bitcoin extends its sideways grind slightly below $17,000 early Tuesday. Ethereum struggles to find direction and moves up and down in a narrow channel at around $1,200.

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.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.