The US Dollar (USD) exhibited resilience against its counterparts on Tuesday as market participants adopted a cautious stance leading up to Thursday’s highly anticipated inflation data release. As major currency pairs remained relatively stable early on Wednesday, the potential influence of comments from central bankers and the 10-year US Treasury note auction later in the day loomed over currency valuations.
USD Performance This Week
This week’s percentage change in the US Dollar (USD) against major currencies is outlined in the table below, highlighting its strength against the Australian Dollar.
On Tuesday, Wall Street’s primary indices opened in negative territory amidst escalating geopolitical tensions in the Middle East. Investors, wary of risk-sensitive assets, were informed by a senior US Defense Department official that Iran-backed Houthi militants executed the largest attack to date on commercial vessels in the Red Sea.
Although stock indices managed to recover some losses by the session’s end, US stock index futures traded slightly lower in the European morning on Wednesday. Concurrently, the benchmark 10-year US Treasury bond yield remained steady slightly above 4%, and the USD Index maintained its position above 102.50. New York Federal Reserve (Fed) President John Williams, who had earlier dismissed discussions of rate cuts in December, is scheduled to deliver a speech in the late American session.
Early Wednesday, data from Australia revealed that the Consumer Price Index (CPI) rose by 4.3% on a yearly basis in November, slightly below the market expectation of 4.4%. Following a deep negative close, AUD/USD saw a marginal increase during Asian trading hours, last trading around 0.6700.
GBP/USD relinquished its gains after surpassing 1.2750 on Tuesday, experiencing daily losses and trading below 1.2700 in the early European session on Wednesday. Bank of England Governor Andrew Bailey is set to testify later in the day, addressing questions about the potential threat to financial stability posed by interest rate hikes.
EUR/USD dipped lower on Tuesday after failing to make a decisive move on Monday, with the pair trading below 1.0950 at the last observation. European Central Bank (ECB) Vice-President Luis de Guindos is scheduled to deliver a speech during the European trading hours on Wednesday.
Following a turbulent Tuesday, USD/JPY gained bullish momentum and climbed above 145.00 on Wednesday. Japanese data released earlier in the day indicated that Labor Cash Earnings rose by a modest 0.2% on a yearly basis in November, falling significantly short of the market expectation of 1.5%.
Gold experienced a reversal in direction after surpassing $2,040, closing the day virtually unchanged. XAU/USD faced modest bearish pressure, trading in the red slightly above $2,020 early on Wednesday.
