The US Dollar (USD) finds itself struggling to make significant headway early Wednesday, as the USD Index (DXY) maintains a relatively stable position just above the 104.00 mark following a halt to its two-day winning streak on Tuesday.
Market focus turns to the Goods Trade Balance report for December, set to feature in the US economic agenda, along with a 10-year note auction by the US Treasury later in the day. Additionally, several Federal Reserve policymakers are slated to deliver speeches during American trading hours, adding to market anticipation.
On Tuesday, the USD experienced a setback against its counterparts amidst a retreat in T-bond yields and a shift towards a more positive risk sentiment.
As European markets opened, US stock index futures showed minimal movement, while the 10-year yield remained relatively stable at around 4.1%. Across the Pacific, data from New Zealand revealed a slight uptick in the Unemployment Rate to 4% in the fourth quarter, below market expectations of 4.2%. Concurrently, the Labor Cost Index rose by 3.9% year-on-year, leading to a modest uptick in NZD/USD following the release.
Meanwhile, the Leading Economic Index in Japan exhibited improvement, rising to 110 in December’s flash estimate from 108.1, while the Coincident Index also saw a boost to 116.2 from 114.6. Despite these positive indicators, USD/JPY displayed little reaction, maintaining a sideways trajectory just below the 148.00 level.
In Canada, USD/CAD witnessed a downturn on Tuesday, closing below the 1.3500 mark. The pair continues to experience mild downward pressure early Wednesday, following remarks by Bank of Canada (BoC) Governor Tiff Macklem reaffirming the BoC’s stance on rate hikes, emphasizing that the central bank sees 5% as a sufficient level to address inflation concerns.
Amidst these developments, EUR/USD continues its upward momentum, edging towards 1.0800 after marginal gains on Tuesday, while GBP/USD remains in positive territory above 1.2600 in European trading.
Gold prices, buoyed by declining US yields, show signs of stability, hovering near $2,035 early Wednesday after reaching $2,040 on Tuesday.