Market Drivers – US Session 13/02/2023

US-Sino tensions appear to relatively weigh on the market sentiment with the beginning of the trading week. The US dollar is making the most out of it. However, a better market sentiment during European trading hours pushed the dollar into the red territory.

Economic Data

The absence of economic data, on Monday, ahead of Tuesday’s awaited US Consumer Price Index update limited the intraday US dollar’s decline.

The Federal Reserve Bank of New York’s monthly Survey of Consumer Expectations showed on Monday that the US consumers’ one-year inflation expectation stayed unchanged at 5% in January.

Further details of the publication showed that the three-year ahead expected inflation declined to 2.7% from 2.9% in December and the five-year ahead expected inflation edged higher to 2.5% from 2.4%.

Key Developments

The British Pound was among the best performers, advancing vs its American rival to 1.2144, retreating modestly ahead of the close. The UK will publish its latest employment figures on Tuesday.

The AUD/USD pair currently trades at around 0.6960, while USD/CAD is down to the 1.3330 region, with commodity-linked currencies benefiting from the better tone of Wall Street. US indexes pulled back from their intraday highs but anyway ended the day with gains.

Government bond yields seesawed across the day, appreciating during Asian trading hours but shedding some ground at the end of the day amid a better sentiment. However, the yield on the 2-year Treasury note advanced, while that on the 10-year note finished the day pretty much unchanged.

Spot gold eased and trades at fresh February lows just above $1,850 a troy ounce. Crude oil prices, on the other hand, followed equities with WTI up to $80 a barrel.

The EUR/USD pair bottomed at 1.0655, bouncing towards the 1.0720 price zone. The pair retains gains in early Asia, despite ignoring early headlines. The European Commission released the quarterly Economic Growth Forecasts report. Economic growth in the Euro Zone has been upwardly revised, now seen at 0.9%. Additionally, inflation forecasts have been downwardly revised to 5.6% for this year and 2.5% in 2024.

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