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The US dollar surged throughout the first half of the day helped by risk-off. Asian stocks spent the day with negative performance. European stocks trimmed their losses ahead of the close, but gains were recorded to strong January on Wall Street.
Economic Data
The market’s sentiment improved following the release of US data signaling easing inflationary pressures. The Employment Cost Index rose in the last quarter of 2022 by 1%, below the 1.1% expected and easing from 1.2% in the previous quarter. Afterwards, the US dollar gave up its intraday gains, ending the day with losses.
Australian data released at the beginning of the day was disappointing, with AUD/USD bottoming at 0.6983 during the European session. The pair later recovered to end the day unchanged in the 0.7050 price zone.
The EUR/USD pair tested the 1.0800 price zone, to end the day at around 1.0860. The Euro Zone the Q4 Gross Domestic Product (GDP) showed the economy grew at an annualized pace of 1.9%, better than the 1.8% anticipated by financial markets. On a negative note, German Retail Sales plunged by 5.3% MoM in December, much worse than expected.
Key Developments, Key Factors
Financial markets witnessed a volatile Tuesday as market players were busy anticipating the outcome of the US Fed’s meeting concerning rate decision. Fed will be the first but not the last to announce rate policy as the European Central Bank and the Bank of England will announce theirs on Thursday.
The Canadian Dollar was the strongest USD rival, helped by firmer oil prices, while the British Pound was the weakest. USD/CAD settled at near the 1.3300 figure, while GBP/USD stands in the 1.2330/40 price zone.
Gold met buyers around the $1,900 figure and finished the day at $1,929, while crude oil prices posted modest intraday advances and WTI currently changes hands at $78.50 a barrel.
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