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  • Writer's pictureSieracki Milosz

Forex Market Update: USD Strengthens Amidst Cautious Markets

Forex Market Update January 10 2024

Key Developments on Tuesday and Early Wednesday

The US Dollar (USD) displayed resilience against its rivals on Tuesday, with investors adopting a cautious stance in anticipation of Thursday's crucial inflation data. As we navigate the early hours of Wednesday, major currency pairs remain relatively stable. The market's focus shifts to potential impacts from central bankers' comments and the upcoming 10-year US Treasury note auction later in the day.

Geopolitical Tensions Impact Wall Street

Tuesday witnessed Wall Street's main indexes opening in negative territory, driven by escalating geopolitical tensions in the Middle East. Investors turned away from risk-sensitive assets in response to reports of the largest attack to date on commercial merchant vessels in the Red Sea, attributed to Iran-backed Houthi militants. While stock indices managed to recover some losses by the session's end, US stock index futures traded modestly lower in the European morning on Wednesday.

US Treasury Bond Yield and USD Index Stability

Amidst the market fluctuations, the benchmark 10-year US Treasury bond yield held steady slightly above 4%, contributing to a stable USD Index above 102.50. Later in the day, New York Federal Reserve (Fed) President John Williams is set to deliver a speech, providing insights into the economic landscape.

Australian CPI Data and AUD/USD Movement

Early Wednesday brought data from Australia, revealing that the Consumer Price Index (CPI) rose by 4.3% on a yearly basis in November. Although slightly below the market expectation of 4.4%, this reading followed the 4.9% increase recorded in October. After initially closing in negative territory, AUD/USD edged slightly higher during Asian trading hours, currently hovering around 0.6700.

GBP/USD Faces Challenges

GBP/USD faced challenges after reaching above 1.2750 on Tuesday. The pair experienced daily losses and continues to trade below 1.2700 in the early European session on Wednesday. All eyes are on Bank of England Governor Andrew Bailey, who is expected to testify later in the day regarding the potential threat to financial stability posed by interest rate hikes.

EUR/USD and ECB Vice-President's Speech

EUR/USD edged lower on Tuesday, struggling to make a decisive move. Currently trading below 1.0950, the pair awaits insights from European Central Bank (ECB) Vice-President Luis de Guindos, scheduled to deliver a speech during European trading hours on Wednesday.

USD/JPY Momentum and Japanese Labor Cash Earnings

Following Tuesday's choppy action, USD/JPY gathered bullish momentum, surpassing 145.00 on Wednesday. Data from Japan earlier in the day revealed that Labor Cash Earnings rose by only 0.2% on a yearly basis in November, missing the market expectation of 1.5%.

Precious Metals and Commodity Market Update

Gold reversed direction after surpassing $2,040 and closed the day virtually unchanged. Currently under modest bearish pressure, XAU/USD trades slightly above $2,020 early Wednesday.

Silver (XAG/USD) experiences its third successive day of decline, reaching a fresh weekly low around the $22.80 region during the early European session.

In the energy market, West Texas Intermediate (WTI) Crude Oil prices attract buyers for the second successive day. Despite remaining below the overnight swing high through the first half of the European session, the commodity trades just below mid-$72.00s, reflecting a nearly 0.35% increase for the day.

Stay Informed for Future Forex Insights

For continued updates and in-depth analysis of the Forex market, stay tuned to our platform. We provide comprehensive coverage of key developments, helping you make informed decisions in the ever-evolving world of global finance.

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