Market Drivers – US Session 24/01/2023

Mohamed Abdelhamid 25 January, 2023 3:50 am Forex Market, Market Update

The US dollar dropped against the Euro and had weaker performance despite solid US manufacturing data that stirred some livelihood into markets ahead of key events for the days ahead. Most markets are awaiting clues concerning inflation from the US growth updates in the US economy.

The US 10-year yield was 4bp lower at 3.47% and WTI was down 1.8% at $80.15/bbl. Gold dropped 0.3% to $1,933.3/oz. Bitcoin was little changed on the day at $22,973, steadying after having jumped by about a third in value since early January.

Economic Data

Fifth district manufacturing decreased in January, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index is at -11 in January, down 12 from December. This is worse than the Investing.com forecast of -5.

Key Developments

Eurozone’s business activity returned to modest growth in January, which helped to boost the Euro. The EUR/USD pair was 0.09 % higher at $ 1.0881, just shy of the 9-month high of $ 1.0927 touched on Monday backed by survey data supporting the view that the eurozone economy was doing well despite intense price pressures.

European Central Bank officials suggest that the ECB is set to raise interest rates by 50 basis points in both February and March and will continue to raise rates in the months after.

The US Dollar rose to a near 1-week high against the yen, before giving up those gains but staying above its weakest since May which it recorded ahead of a BoJ policy review. BoJ left policy unchanged enabling a move higher in USD/JPY that touched 131.11 on the day.

GBP/USD was one of the worst-performing pairs and dropped by 0.34 % on the day to 1.2263 after a survey showed British private-sector economic activity fell at its fastest rate in two years in January.

USD/CAD was ending near flat on the day after travelling between a low of 1.3346 and a high of 1.3413 so far while US stocks have been volatile making for choppy trading conditions in the forex space on Tuesday.

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