The greenback appears to have taken a break following the strong start of the new trading year on Thursday. In the upcoming Asian trading hours, investors are expected to remain vigilant on the final Services PMI in Japan as well as the Consumer Confidence gauge. There are no scheduled data releases Down Under at the end of the week, while cautiousness is predicted to dominate the early session ahead of the publication of US Nonfarm Payrolls for the month of December.
Here is what you need to know on Friday, January 5:
The US Dollar Index (DXY) traded in an inconclusive fashion, ending the session around 102.40 after an earlier pullback to the vicinity of the 102.00 zone. Investors’ cautiousness ahead of the critical NFP figures seems to have bolstered the dollar’s price action against the backdrop of mixed risk appetite trends.
US stocks regained composure and set aside Wednesday’s pullback, revisiting the 37700 zone when tracked by the Dow Jones on Thursday. Positive ADP readings bolstered the optimism ahead of December Payrolls due on Friday.
Some support for the greenback 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 greenback 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 continuation of the recovery in US yields and the directionless theme in the greenback did not prevent Gold from gathering some fresh steam and retest the $2040 region per troy ounce. Its cousin Silver also left behind part of its recent steep downward trend and reclaimed the $23.00 region per ounce after dropping to three-week lows.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.