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The dollar took a breather on Wednesday after Fed’s Powell delivered a speech that avoided monetary policy clarity and the focus now shifted to the US CPI data on Thursday. The US dollar was downbeat as investors priced in a softer tone on monetary policy tightening. There will be a release of Crude oil inventories, along US10-year bond auction later in the New York session.
EURUSD held on to small gains of +0.13% on the day ahead of the US inflation data due Thursday. ECB’s Mario Centeno said late Tuesday the central bank is approaching the end of its interest rate hike cycle sounding rather dovish although there was no significant impact on the EUR. Focus now shifts to the US CPI data after Fed’s Chair Powell steered off monetary policy clarity on Thursday. Adding on, crude oil inventories will be released later in the day and are expected to have fallen to -2.243 million from 1.694 million. The pair is trading in the 1.0750 zone with a number above 1.0800 for a further rally.
GBPAUD tumbled by -0.33% following pleasing Australian data. In November, retail sales in Australia jumped to 1.4% from 0.4% in October also beating expectations of 0.6%. The country’s Q4 [YoY] CPI came in at 7.35 as anticipated from 6.9%. The sterling was weakened by a cautious mood and lack of fundamental drivers, although investors anticipate the UK growth data due on Friday. Down from 1.7650 bears may reclaim 1.7500 and 1.7400.
NZDCAD fell -0.32% as the dampened risk mood acts as a headwind for the risk-sensitive NZD. The CAD got helped by an uptick in crude oil prices as the demand outlook brightens. Late Wednesday, the New Zealand Building Consents will be published showing the number of permits issued by the Government in November. The pair got capped at 0.85700 and up next on the slide are 0.85000 and 0.84800.
European Stocks rallied following Fed Chair Powell’s speech. FTSE100 extended a rally above the 7700 level by +0.39% and the key resistance level to watch out for is the 7800 level. CAC40 soared by +0.89% as bulls gain momentum above the 6800 level and upside gains are capped by the 7000 level, a 1-year resistance level. DAX advanced by +0.48% and key levels is 14950 resistance and 14700 support.
US stock futures were trading sideways as the focus shifted to inflation data scheduled for release later this week. S&P500 futures rose by +0.19% after reclaiming the 3900 near-term resistance. Upside gains are capped by the 4000 psychological level. Nasdaq100 futures added +0.20% of gains and bulls could target the 11450 level if 11200 holds as near-term support. DJIA index futures edged higher by +0.18% and critical levels to watch out for are the 34000-resistance level and 33700 near-term support.
In commodity markets, oil recovered losses modestly on Wednesday ahead of US Crude oil inventories. USWTI crude oil futures were up +1.33% as bulls maintain the 72.00 support level. The next key target could be the 80.00 level. Brent crude oil added +1.50% as bulls attempt to reclaim the 86.00 near-term high. However, a break below the 78.00 level, bears could regain control.
