Market Drivers – US Session 17/01/2023

US stocks traded within a tight range on Tuesday after contrasting Q4 earning reports from investment banks Goldman Sachs and Morgan Stanley, while China unveiled disappointing annual GDP data. Wall Street’s S&P 500 edged 0.2 per cent lower, supported by rising prices for energy and banking companies, while the tech-heavy Nasdaq 100 rose 0.2 per cent.

Morgan Stanley began the day as the S&P’s top performer, rising more than 5 per cent after higher net revenues at its wealth management division overshadowed a 40 per cent year-on-year drop in net income. Goldman Sachs has declined 7 per cent after the bank’s profits deteriorated by two-thirds in the final three months of last year.

The EUR/USD pair fell to 1.0771 amid market bets that European Central Bank policymakers could consider slowing the pace of quantitative tightening. President Christine Lagarde, according to various rumours, will opt for a 50-basis points rate hike in February, reducing hikes to 25 bps starting in March.

The US Dollar retained its intrinsic weakness on Tuesday, ending the day with losses against all of its major rivals. The Euro was the worst performer, while the British Pound was the best against the dollar.

The AUD/USD pair finished Tuesday near the 0.7000 level, retaining its positive momentum despite the poor tone of global equities.

The USD/JPY pair trades around 128.40 ahead of the Bank of Japan monetary policy decision.

Spot gold trades little changed at around $1,907, while crude oil prices were up, with WTI hovering around $81 per barrel.

Key Developments

The GBP/USD flirted with 1.2300 after the United Kingdom’s employment-related figures hinted at a relatively tight labour market. The Bank of England would then have room to push the benchmark rate higher and maintain it there for longer. The UK will publish December inflation figures on Wednesday.

Economic Data

The Canadian Consumer Price Index (CPI), rose at an annual pace of 6.3% in December, while the monthly CPI fell by 0.6%. USD/CAD trades around 1.3376.


Wednesday will bring an update on EU inflation, the US Producer Price Index and the UK CPI.

US Treasury Secretary Janet Yellen will meet Chinese Vice Premier Liu He in Switzerland on Wednesday to exchange views on economic ties, global economic developments and talks are expected to focus on means to deepen communication between the world’s two largest economies.

Also Read
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GBP/USD reacts to strong UK data ahead of key Consumer Price Index

Earnings drop drags Wall Street lower

Could BoC hike rate again despite Canada’s easing Inflation?

Yen expected to soar if BoJ decides on additional YCC adjustment

Ahead of BoJ’s policy decision, USD/JPY fluctuates around 128.50,