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The US dollar recorded fresh losses on Wednesday against most of major rival currencies. The dollar’s decline was contained, but it is obvious that further declines are probable.
Earlier in the day, China announced a series of measures easing Covid-linked restrictions. The US Treasury yield curve inverted the most in over forty years, amid concerns related to the global economic growth and uncertainty ahead of the Fed’s monetary policy decision. Yields finished the day in the red territory, as demand for government bonds surged again after Putin’s comments concerning nuclear threats, triggering another risk factor. The 10-year note currently yields 3.43%, while the 2-year note pays 4.26%.
GBP/USD trades just above 1.2200, while AUD/USD hovers around 0.6730. The USD/JPY pair is down to 136.30, while USD/CHF settled at around 0.9400.
Gold benefited from the broad dollar weakness and trades at around $1,787 a troy ounce, while crude oil prices remained under selling pressure. WTI trades at $72.10 a barrel, its lowest since December 2021
Economic Data
China’s macroeconomic figures were discouraging. The November Trade Balance posted a surplus of $69.84 billion, as exports fell by 8.7%, while imports were down 1.1%. The poor figures exacerbated concerns about global economic progress.
The Eurozone Gross Domestic Product came in better than anticipated in the third quarter of the year, posting an annualized growth of 2.3%. The quarterly gain was o 0.3%, better than the 0.2% anticipated. EUR/USD battles the 1.0500 level, trading a handful of pips above it.
Key Developments
In mid-US session, Russian President Vladimir Putin warned that the threat of a nuclear war is rising, adding that nuclear weapons could be used to defend itself and its allies.
The Bank of Canada hiked its interest rate by 50 basis points to 4.25% as expected. Policymakers noted that there is growing evidence that the tighter monetary policy is training domestic demand while acknowledging inflation remains elevated.
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