Market Drivers – US Session 29/12/2022

Mohamed Abdelhamid 30 December, 2022 5:12 am Commodities, Forex Market, Market Update

Amid thin market conditions, the US Dollar retreated on Thursday. Positive market sentiment madde a very good day for US equities.

Key Developments
Chinese news headlines triggered several market reactions. On Wednesday, financial markets were on alert after Italy reported that roughly 50% of the passengers of two flights arriving in Milan on tested positive for COVID-19, and several western nations rushed to impose control on Chinese travelers, fearing the spread of a new strain. However, mid-European morning Italy reported they found no new covid variants in the aforementioned tests.

The mood improved ahead of the US session’s opening, with Wall Street posting substantial gains. Nevertheless, growth and inflation concerns remain in the background. US Treasury yields were up at the shorter end of the curve, while the 10-year note yield shed 4 bps.

The EUR/USD pair peaked at 1.0689, holding on to gains ahead of the Asian opening. GBP/USD hovers around 1.2060, with Pound gains limited amid strikes going on in the United Kingdom. The 1,000 members of the Public and Commercial Services Union (PCS) are striking for four days until New Year’s Eve.

Commodity-linked currencies advanced vs their American rival. AUD/USD trades in teh 0.6780 price zone, while USD/CAD is down to 1.3540.

The Japanese yen appreciated amid the broad US Dollar weakness and news that the Bank of Japan conducted two unplanned bond purchase operations.

Spot gold edged marginally higher and finished the day at around %1,816 a troy ounce. Crude oil price weakened at the beginning of the day but trimmed most of its losses ahead of the close. WTI trades at around $78.30 a barrel

Economic Data

The price of gold holds its latest gains above $1,816 amidst thin liquidity conditions. The worse-than-expected Initial Jobless Claims data that failed to support the US dollar on Thursday. The US Department of Labour said that Initial Jobless Claims for the week ended on December 24 jumped to 225K, and 9K above the previous week’s record. Continuing claims rose to 1.7 million in the week that ended on December 17, the highest since early February.

Once the data report was announced, gold prices increased as investors’ fears for a tighter labour market eased. Additionally, US Treasury bond yields dropped, with the 10-year benchmark yield falling five bps, down to 3.830%. Consequently, the greenback weakened, as shown by the US Dollar Index (DXY), which tracks the dollar’s performance against a basket of rivals, diving 0.54%, at 103.901.

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