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Markets experienced a relief rally as the dollar softened ahead of the FOMC meeting minutes. Investors increased bids on risky assets as Chinese reopening hopes also helped lift the sentiment. Commodity-backed currencies such as the New Zealand dollar and the Australian dollar rallied while oil markets plunged as demand concerns remains an issue in the meanwhile. There will be a release of US JOLTS job openings, ISM Manufacturing PMI data and API Weekly Crude oil Stocks.
AUDUSD rallied by +2.30% on dollar weakness ahead of FOMC Meeting Minutes. The US dollar tumbled as US Manufacturing PMI data released on Tuesday fell to 46.2 vs 47.7 previous reading suggesting the market is in a contraction phase. The FOMC meeting minutes will shed light on the Fed’s assessment of labour data and inflation outlook in the short-term. The Chinese data of easing the ban on Australian coal gave a lift for the Aussie. The pair bounced off a 0.67000 level and bulls are currently capped by the 0.6900 level, a 4-month high.
EURNZD plunged by -0.50% following mixed Eurozone economic data. The French inflation data unexpectedly softened in December and could ease tightening pressure on the ECB. The German and Italian Services PMI shows improvement, but data remains in the contraction zone. New Zealand dollar advanced on China reopening hopes along with considerations of massive support for its economy which could boost NZD in the near term. The bulls retracted from the 1.6900 level towards the 1.6730 level, a 10-day low and a break below that level could trigger selling pressure towards the 1.6400 level.
GBPUSD rose by +0.78% early Wednesday morning ahead of US economic data. The Pound rallied on risk-on sentiment along with positive Consumer Credit Data. The BoE Consumer Credit for November rose to 1.507B against 0.900B surveyed. The dollar weakness continued to dominate the markets as investors shift their focus to US Jobs data later on Friday and FOMC data today. The bulls regained strength after claiming the 1.2000 level and upside gains remain capped by the 1.21000 psychological level.
European stocks rallied early Wednesday on Chinese optimism grows. FTSE100 was up +0.50% towards the 7600-resistance level after bulls claimed the 7500 level. CAC40 rose by +1.39% as French inflation unexpectedly slows, easing pressure on the ECB. The critical levels to watch out for are the 6700 support and 6800 resistance level. DAX surged by +1.09% and upside gains are capped by the 14500 level, while 14000 remains the near-term support level.
US stock futures recover as dollar softens ahead of FOMC meeting minutes. S&P500 futures rose by +0.28% although the price remains rangebound between the 3900 resistance and 3780 support level. Nasdaq100 futures added +0.30% and key levels to watch out for are the 11000 resistance and 10800 support level. DJIA index futures edged higher by +0.21% as 33000 continues to hold as an immediate support level and bulls are challenged by the 33500-resistance level.
Gold rose by +1.04% as bulls take another leg higher on US dollar weakness, continued Central bank rate hike sentiment and subdued economic outlook. The yellow metal broke above the 1850 near-term resistance to the 1858 level and upside gains are capped by the 1880 level. The FOMC meeting minutes scheduled for release later in the New York session remain a critical driver for gold in the near term.
