Market Drivers – US Session – 18-01-2022

Mohamed Abdelhamid 19 January, 2022 3:50 am Commodities, Forex Market, Global Stock Market, Market Update

The US dollar has been the most prominent winner, and performed up against all major rival currencies. US Treasury yields soared to fresh highs with the yield on the 10-year note reaching 1.856% and that on the 2-year note surpassing 1%, and consequently impacting gold prices.

At $1,813.56, gold is attempting to correct the New York session’s sell-off from $1,820 and has eyes to $1,1818 within an otherwise bullish trend as determined by the 200 moving average. The US dollar strength has, until now, undermined the performance of the bulls but despite the fresh highs in the US dollar, gold is robust.

US Stocks edged lower, with all global indexes ending the US session in the red territory. The GBP/USD pair broke below 1.3600, ignoring UK employment figures.

AUD/USD fell to 0.7170, bouncing modestly ahead of the close. Weaker gold prices put additional pressure on the pair, as the bright metal settled around $1,814 a troy ounce.

The USD/CAD pair posted a modest intraday advance, as higher oil prices limited CAD’s weakness. WTI trades at $84.50 a barrel after reaching its highest since October 2014.

Economic Data
The EUR/USD pair is currently trading at around 1.1420, despite an encouraging German ZEW survey, showing a sharp bounce in Economic Sentiment.

The UK unemployment rate eased to 4.1% in the three months to November, while the unemployment claimant fell by 43.3K in December.

In the US, Builder confidence fell one point to 83 in January, according to the National Association of Home Builders. Of the index’s three components, current sales conditions was unchanged at 90. Sales expectations in the next six months fell 2 points to 83, and buyer traffic fell 2 points to 69. The average rate on the 30-year fixed is now about 50 basis points higher than it was a month ago and 75 basis points higher than it was one year ago.

Other Developments
The scandal about the Downing Street parties in the worst of the UK lockdowns puts PM Boris Johnson leadership at risk.

At the beginning of the day, the Bank of Japan announced its decision on monetary policy. As widely anticipated, the central bank remained on hold, although policymakers revised to the downside their growth forecasts for this fiscal year. The USD/JPY pair peaked at 115.05, but trimmed gains ahead of the close and ended the day unchanged at around 114.50.

France central bank Chair and ECB governing council member François Villeroy de Galhau reiterated on Tuesday that French inflation is likely to fall back under 2.0% by the end of 2022. However, should inflationary pressures prove more persistent, he added, he has no doubt that the ECB would adapt its monetary policy faster.

After hitting multi-year highs near the $86.00 per barrel level, WTI has since backed off to trade around $85.00. Market commentators have attributed rising geopolitical tensions in the Middle East as behind the latest push higher.

After hitting multi-year highs early on during the European trading session near the $86.00 per barrel level, front-month WTI futures have since backed off to trade around $85.00, though still hold onto gains of about 60 cents on the session.

Market commentators have attributed geopolitical tensions as driving the latest upside in crude oil prices, after an attack by Yemen’s Houthi militia on the UAE earlier in the week ratched up tensions in the region.

Following the drone and missile strikes that killed three people and triggered explosions in fuel trucks, the Houthis have been threatening to target further UAE facilities.