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On Tuesday, the US dollar soared against all of its major rival currencies. The dollar started the day on the back foot, but secured robust gains early during the European session, triggering stops and further accelerating its advance.
Key Developments
EU countries reached an agreement on a coordinated approach to the COVID-19 situation, including implications for increased travel from China, according to the EU Health Security Committee Meeting.
EUR/USD trades at around 1.0550, and in the wider perspective the slump seems corrective. The Pound was the most resilient, down to 1.1975 against the greenback. AUD/USD trades around 0.6730, while USD/CAD soared to 1.3680. Finally, USD/JPY ended the day little changed around 130.70 after trading as low as 129.49.
Financial markets were optimistic at the beginning of the day, with Asian shares up amid signs coronavirus infections may have peaked in China.
Hopes that China will soon reverse the latest economic downturn faded, as the session developed, with Asian indexes ending the day around their opening levels. European and American indexes also advanced, although Wall Street quickly changed course and finished the US session in the red territory.
Gold soared to $1,850 and later retreated, ending the day with gains at around $1,836 per ounce. Crude oil prices collapsed, with WTI trading at around $76.70 a barrel.
Economic Data
Germany released the preliminary estimate of the December Harmonized Index of Consumer Prices (HICP), which rose at an annual pace of 9.6%, well below the 10.7% expected, and easing from 11.3% in November.
The US S&P Global Manufacturing PMI for December’s final reading was unchanged at 46.2. The manufacturing sector posted a weak performance as 2022 was brought to a close, as output and new orders contracted at sharper rates.
On Wednesday, traders’ attention will shift to the US as the country will release the ISM Manufacturing PMI and the FOMC Meeting Minutes.
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