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After a solid start to the new trading year, the dollar has declined. During Asian trading hours, investors are predicted to maintain their vigilance, paying particular attention to the Consumer Confidence index and the final Services PMI in Japan. Ahead of the US Nonfarm Payrolls for December, caution is anticipated in the early session. No scheduled data releases are anticipated.
After an earlier decline to the 102.00 region, the US Dollar Index ended the afternoon at roughly 102.40, exhibiting a lacklustre trading session. Amidst conflicting risk appetite trends, the dollar’s price action appears to have been supported by investors’ cautiousness ahead of the crucial NFP figures.
US markets recovered their composure and ignored the decline on Wednesday, returning to the 37700 zone on Thursday as the Dow Jones tracked them. ADP figures that were positive increased confidence before Friday’s deadline for the December payrolls.
Some support for the dollar also came after market participants continued to digest the somewhat hawkish tilt of the FOMC Minutes releases late on Wednesday, while a firmer-than-expected ADP report (+164K) also added to the buoyant tone in the currency. Further data releases saw weekly Initial Claims rise by 202K in the week to December 30.
EUR/USD regained the smile and partially reversed the recent pronounced decline, advancing to the 1.0970 zone, where some initial resistance appears to have emerged. There was no reaction in the European currency after German flash inflation figures saw the CPI rise 3.7% in the year to December.
GBP/USD initially climbed to two-day highs past 1.2700 the figure on the back of a positive final Services PMI in the last month of 2023, although the move lacked follow-through, and spot eventually receded to the 1.2660 zone.
The selling pressure in the Japanese yen remained unabated for the third consecutive session, this time lifting USD/JPY to the proximity of the 145.00 hurdle on the back of the improvement in risk-linked assets and further gains in US yields across the curve.
AUD/USD dropped for the fifth straight session despite the absence of direction in the dollar and positive readings from the Caixin Services PMI in China in December. The broad-based weakness in the commodity space also weighed on the Aussie dollar, despite an improvement in iron ore to levels last seen in May 2022 near $145 per tonne.
Still around commodity currencies, the Canadian dollar intensified its decline and favoured another test of the area of two-week highs in USD/CAD ahead of the publication of Canadian labour market report on Friday.
The surge of US yields and the dollar’s aimless trend did not stop gold from gaining momentum and testing the $2040 per ounce. After plunging to three-week lows, Silver also reversed some of its recent sharp decline and recovered the $23.00 area per ounce.
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