Market Drivers – US Session, Jan. 24

A growing appetite for riskier assets caused gold prices to retreat during the North American session, closing in on the $2010 area. The recovery of interest in the risk complex put pressure on the dollar and drove the EUR/USD pair above 1.0900. News of further stimulus in China from the PBoC and positive readings from preliminary PMIs in Europe and the US added to the overall bullish mood.

The USD Index (DXY) was forced by the risk-on trade to test the area below the crucial 103.00 support, but a subsequent rally in the index was caused by rising yields. Going ahead, the weekly Initial Claims and Durable Goods Orders will be highlighted on Thursday, in addition to the Q4 flash GDP Growth Rate.

While the rise petered out towards the close of the NA session, EUR/USD broke through the 1.0900 barrier in Europe and to new multi-day highs. The European Central Bank (ECB) is expected to maintain its current interest rate on Thursday. Additionally, President Lagarde is seen supporting the idea of a rate reduction in the summer.

GBP/USD maintained the erratic performance and faded Tuesday’s retracement, managing to reclaim the area beyond 1.2700 the figure on the back of the risk-on sentiment.

USD/JPY bounced off multi-session lows near 146.60, regaining the 147.00 barrier and above amidst higher US and Japanese yields. Next on tap in the domestic docket is the weekly Foreign Bond Investment.

AUD/USD continued to navigate without a clear direction and retreated to the 0.6580 zone after climbing to weekly highs around 0.6620 during early trading. The AUD found support in the PBoC stimulus, higher copper prices, and the bearish tone in the greenback.

USD/CAD advanced to four-day peaks north of the 1.3500 barrier as investors assessed the BoC’s decision to keep rates unchanged for the fourth meeting in a row. Governor Macklem suggested that any discussion on rate cuts is premature.

A larger-than-expected drop in US crude oil supplies and Chinese stimulus helped the barrel of WTI reach a new four-week top closer to the $76.00 mark.

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