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02.01.2024 Market Report


EUR/USD is back in the red below 1.1050 in early Europe on Tuesday. A broad US Dollar recovery and cautious optimism are weighing on the major on the first trading day of 2024. The focus shifts to EU/ US economic data. 


GBP/USD is posting modest gains in European trading on Tuesday, having found support just above 1.2710. The pair stands resilient to a broad US Dollar rebound and rising US Treasury bond yields amid mild market optimism. Final UK, US PMIs awaited. 


The Japanese Yen (JPY) comes under some selling pressure on the first trading day of 2024 and remains depressed heading into the European session. A devastating earthquake in central Japan is seen as a key factor undermining the domestic currency amid relatively thin trading volumes. This, along with the ongoing US Dollar (USD) recovery from a multi-month low, bolstered by a further rise in the US Treasury bond yields, assists the USD/JPY pair to move away from its lowest level since July 28, around 140.25 region touched last Thursday.


On Tuesday, the Australian Judo Bank final Manufacturing PMI for December 2023 came in at 47.6 from the flash reading of 47.8, weaker than the expectation of 47.7. The December Manufacturing Output Index backed to a historically low reading of 45.5. The report suggests that the manufacturing sector in Australia has shown a consistent easing trend throughout 2023, responding to monetary policy, with inflation aligned with the RBA’s target levels. 


The NZD/USD pair edges lower during the only Asian trading hours on Tuesday. The weaker-than-expected Chinese economic data exerts some selling pressure on the New Zealand Dollar (NZD). At press time, the pair is trading at 0.6313, losing 0.13% on the day.


The USD/CAD pair struggles to gain any meaningful traction on Tuesday and oscillates in a narrow trading band during the Asian session. Spot prices currently trade around mid-1.3200s, nearly unchanged for the day amid mixed cues and relatively thin liquidity conditions.


USD/CHF has retraced its recent losses registered on Friday, trading higher near 0.8450 during the Asian session on Tuesday. The US Dollar (USD) receives upward support at the beginning of the year, with the US Dollar Index (DXY) edging above 101.50.


Oil prices jumped 1.5% in the first session of the New Year, due to potential supply disruptions in the Middle East after a naval clash in the Red Sea, and hopes of strong holiday demand and an economic stimulus in China, the top crude importer.


Gold price regains positive traction and stalls its corrective slide from a multi-week top. Dovish Fed expectations and geopolitical risks continue to lend support to the XAU/USD. Rising US bond yields underpin the US Dollar and might keep a lid on any further gains.

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