Today in Forex: The US Dollar Perks From a Risk Averse Mood
What You Need to Take Care of on Tuesday, January 31:
The US Dollar advanced modestly at the start of the week, supported by a gloomy market mood. The US dollar maintains its positive bias ahead of the Asian opening, but caution reigns supreme as the macroeconomic calendar is packed with high-level events this week.
Australia will release December Retail Sales data early on Tuesday, which is expected to be 0.3% lower than the previous month. China will also release the NBS Manufacturing and Non-Manufacturing PMIs. The first is expected to rise from 47 in November to 49.7 in December, while services output is expected to rise from 41.6 to 51.
The US Federal Reserve, the European Central Bank, and the Bank of England will announce their monetary policy decisions on Wednesday and Thursday. Market participants are now speculating on a 25 basis point (bps) rate increase. A 50 basis point rate rise is completely factored in for the ECB, while the BoE is likely to raise its benchmark rate by 50 basis points.
Earlier in the day, a group of academics and business leaders encouraged the Bank of Japan to make its 2% inflation objective a long-term ambition. According to reports, the plan also emphasized the need for interest rates to grow more by economic fundamentals and to restore Japan's bond market function.
Haruhiko Kuroda, Governor of the Bank of Japan, remarked that the central bank's first mission is price stability, and he maintained that 2% inflation is achievable given wage growth and the present easy policy. USD/JPY fell to 129.19 but concluded the day at 130.50 due to widespread US Dollar demand.
EUR/USD briefly moved above 1.0900 before settling at 1.0840. The German economy increased at an annualized rate of 1.1% in the fourth quarter of 2022, falling short of predictions of 1.3%.
In addition, according to the Harmonized Index of Consumer Prices (HICP), Spanish inflation unexpectedly jumped by 5.8% year on year in January, raising concerns ahead of the ECB's monetary policy meeting later this week.
GBP/USD has fallen to 1.2340, while AUD/USD is trading at 0.7050. The USD/CAD pair has gained to the current price of 1.3390. Spot gold is now trading at roughly $1,922 per troy ounce. Crude oil prices have fallen dramatically, with WTI presently trading around $77.70 per barrel.