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19.12.2023 Market Report


EUR/USD is holding gains above 1.0900 in European trading on Tuesday. The US Dollar underperforms, despite a cautious mood, as the US Treasury bond yields stay on the back foot. EU/ US data and central banks’ speeches awaited. 


The GBP/USD pair snaps its two-day losing streak during the early Asian session on Tuesday. The rebound of the pair is bolstered by the weaker US Dollar (USD) and the lower US Treasury bond yields. Investors await the UK inflation data, due on Wednesday. The annual CPI and Core CPI figures are estimated to show an increase of 4.4% YoY and 5.5% YoY in November, respectively. The major pair currently trades near 1.2653, up 0.05% on the day.


USD/JPY is strongly bid near 144.00 in the European morning on Tuesday. The pair picked up fresh bids after BoJ Governor Ueda maintained the dovish rhetoric. The BoJ left policy settings and forward guidance unchanged, smashing the Japanese yen.   


The AUD/USD pair attracts some buyers during the early Asian session on Tuesday. The pair currently trades near 0.6715, up 0.16% for the day. The Reserve Bank of Australia (RBA) released the Minutes of its December monetary policy meeting on Tuesday, suggesting that the central bank saw encouraging signs of progress on inflation and this needed to continue.


NZD/USD continues to move on an upward trajectory that began on December 11, trading higher around 0.6240 during the European session on Monday. The New Zealand Dollar (NZD) gains ground against the US Dollar (USD) on the back of improved Kiwi economic data.


The USD/CAD pair struggles to capitalize on the previous day’s goodish bounce from mid-1.3300s or a three-month low and trades with a mild negative bias, just below the 1.3400 mark during the Asian session Tuesday. The downside, however, remains cushioned in the wake of the overnight dovish remarks by the Bank of Canada (BoC) Governor Tiff Macklem, saying that the central bank could start cutting rates sometime in 2024. The markets were quick to react and expect the BoC to begin easing as soon as April, with a cumulative rate cut of at least 100 bps by the end of next year. This, in turn, should act as a tailwind for the USD/CAD pair, despite the recent goodish recovery in Crude Oil prices, which tends to benefit the commodity-linked Loonie.


USD/CHF continues to lose ground on the back of the Middle East situation and dovish sentiment surrounding the US Federal Reserve’s (Fed) interest rates trajectory in 2024. The USD/CHF pair trades lower near 0.8670 during the Asian session on Tuesday.


Oil prices rose on Tuesday as attacks by Yemen’s Iran-aligned Houthi militants on ships in the Red Sea disrupted maritime trade and forced companies to reroute vessels.


Gold price (XAU/USD) struggles to capitalize on the previous day’s positive move and trades with a mild negative bias heading into the European session on Tuesday. 

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