Despite a cautious market attitude, the US dollar is struggling to recover
The US Dollar began the new week under moderate negative pressure, with the US Dollar Index falling below 102.00 during Asian trading hours on Monday. Following Friday's strong rally, the market attitude appears to have turned cautious, with US stock index futures trading slightly lower. At the same time, the benchmark 10-year US Treasury bond yield remains just below 3.5%.
Later in the afternoon, the Bundesbank of Germany will release its monthly report, and the European Commission will release the preliminary Eurozone Consumer Confidence Index. The Federal Reserve Bank of Chicago's National Activity Index for December will be included on the US economic calendar.
Nonetheless, market activity remained sluggish due to low trade volumes over the Chinese New Year holiday. The Bank of Japan (BoJ) issued the minutes of its December monetary policy meeting during the Asian session.
According to the magazine, several members stated that the BoJ should restate and clarify that the yield band's expansion was not a move aimed at exiting the ultra-easy policy. The USD/JPY pair sustained its recent advances and was last seen trading in positive territory at about 130.00.
As the 10-year US Treasury note yield increased by over 3% on Friday, gold struggled to maintain its upward momentum heading into the weekend. XAU/USD closed the day slightly lower after reaching a multi-month high of $1,937. At the time of publication, the pair was trading in a narrow range of over $1,920.
The EUR/USD gained traction to begin the week, reaching a high over 1.0900 for the first time since mid-April before easing somewhat in the early European morning. Over the weekend, European Central Bank (ECB) Governing Council member and Austrian central bank Governor Olli Rehn stated that the ECB had grounds for "substantial interest rate rises" this winter and spring. Meanwhile, according to the results of a recent Reuters poll, the ECB is predicted to opt for a 50 basis point (bps) rise at its February monetary policy meeting, with the policy rate expected to reach 3.25% by mid-year.
During Asian trading hours on Monday, GBP/USD rose to 1.2450 before reversing much of its day's gains and falling to 1.2400. In the absence of high-impact data releases, risk sentiment and the valuation of the US Dollar may continue to dictate the pair's movement. S&P Global will issue preliminary Manufacturing and Services PMI data for Australia in the early session on Tuesday. Following last week's tumultuous trading, the AUD/USD is trading just around 0.7000 early Monday.
The USD/CAD plummeted substantially on Friday, finishing the week below 1.3400. At roughly 1.3380 in the European morning, the pair remains calm. Later in the afternoon, Statistics Canada will issue the New Housing Price Index data for December, which is predicted to be -0.2%.
Bitcoin surpassed $23,000 for the first time since August on Saturday, but it failed to maintain its positive momentum. Following Sunday's tumultuous movement, BTC/USD appears to have entered a consolidation period below $23,000 early Monday. Ethereum gained about 5% last week, marking the sixth consecutive week of increases. To begin the week, ETH/USD remains just above $1,600.