Market Drivers – US Session, January 15
The firm demand for the dollar encouraged the USD Index to add to last Friday’s gains on the back of the resurgence of risk aversion bolstered by geopolitical concerns, particularly in the Middle East. The DXY has extended its consolidative theme in place since the beginning of the year. In the US, the New York Empire State Manufacturing Index is due on Tuesday along with a speech by FOMC Christopher Waller.

EUR/USD managed to bounce off daily lows near 1.0930 and settled around the 1.0950 region amidst marginal gains and a decent rebound in German yields, while comments from ECB policymakers ruling out rate cuts in the near term supported the bounce in spot.

Germany is expected to dominate the debate on Tuesday with the release of the final December CPI, Economic Sentiment, and Bundesbank’s J. Nagel speech. GBP/USD remains unchanged despite a rebound in the greenback, ahead of the labour market report and BoE Governor A. Bailey’s speech.

Japan’s release of Producer Prices is expected to provide more details on the country’s inflationary scenario. USD/JPY reversed two losses and re-returned to the 146.00 barrier. AUD/USD remains lower, testing the key contention zone around 0.6650. Westpac will publish its monthly Consumer Confidence gauge for January.

USD/CAD rose for the third session in a row, reaching a new five-week high near 1.3450. The Canadian Dollar is expected to take center stage with December inflation figures. Gold and Silver gains were supported by geopolitical effervescence and the risk-off mood. The release of inflation figures for December is expected on Tuesday.

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