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20.12.2023 Market Report


EUR/USD is retreating toward 1.0950 early Europe on Wednesday. The US Dollar is attempting a tepid bounce, as investors turn cautious amid a slew of less dovish Fedspeak. The Euro stays supported by the recent hawkish ECB commentary. 


GBP/USD came under bearish pressure and dropped below 1.2700 early Wednesday. The data from the UK showed that the annual inflation, as measured by the change in Consumer Price Index (CPI), declined to 3.9% in November from 4.6% and weighed on Pound Sterling.


The Japanese Yen (JPY) gains some positive traction on Wednesday and recovers a part of its recent heavy losses registered over the past three days against the US Dollar (USD). The JPY sticks to its intraday gains through the early European session, with the USD/JPY pair touching a fresh daily trough, around the 143.30 region in the last hour. The JPY bulls, however, might refrain from placing aggressive bets in the wake of the Bank of Japan’s (BoJ) decision to stick to its ultra-loose monetary policy settings on Tuesday. The central bank also made no changes to its dovish policy guidance and disappointed some investors hoping for a language to signal a near-term shift away from negative interest rates. 


The AUD/USD pair extends its rally during the early Asian session on Wednesday. The softer US Dollar (USD) and a rise in commodity price lends some support to the Australian Dollar (AUD), which underpins AUD/USD. The pair currently trades around 0.6762, up 0.01% on the day.


The NZD/USD pair snaps its seven-day winning streak during the Asian session on Wednesday. However, the downside of the pair might be limited due to the ongoing US Dollar (USD) weakness and lower US Treasury bond yields. At press time, the pair is trading at 0.6261, losing 0.09% on the day. 


The USD/CAD pair stages a modest bounce from its lowest level since August 4, around the 1.3330 area touched earlier during the Asian session on Wednesday and recovers a part of the previous day’s Canadian CPI-inspired losses. Spot prices currently trade just below mid-1.3300s, up 0.10% for the day, though any meaningful appreciating move still seems elusive.


The USD/CHF pair finds an interim support after a steep correction to near the 0.8600 mark in the early European session. The asset is expected to witness more downside as the broader appeal for the US Dollar is bearish as rate cuts by the Federal Reserve (Fed) has come into play.


Oil was little changed on Wednesday as investors kept an eye on the situation in the Red Sea after the recent attacks by Iran-aligned Yemeni Houthi militants.


Gold price is catching a breather near $2,040 early Wednesday, having tested multi-day highs at $2,048 on Tuesday. The US Dollar (USD) is licking its wounds in tandem with the US Treasury bond yields, keeping Gold buyers hopeful.  

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