What you should know on Tuesday, January 12:
The dollar fell sharply on Tuesday, following comments from US Federal Reserve Chairman Jerome Powell. In Senate hearings amid his nomination for a second term, the leader of the US central bank mixed an aggressive view of the economy with a cautious approach on reducing the balance sheet.
Powell noted that the economy is growing at its fastest pace in years, while the job market is “robust.” In addition, he said the Fed would prevent higher inflation from taking hold, cooling market concerns. At the same time, he said the balance sheet liquidation could occur “perhaps later in the year,” which would cool expectations of an aggressive phase-down.
Meanwhile, US Fed Vice Chairman Richard Clarida resigned on Monday after failing to report on equity trading just days before the Fed announced emergency financial measures to prop up markets amid the crisis. coronavirus pandemic. The Fed vice chairman said that failure to report those transactions was the result of “inadvertent errors.”
Wall Street advanced with relief, with the three main indices maintaining gains before the closing. Yields on US government bonds declined as the yield on the 10-year Treasury fell back to the 1.75% level.
EUR / USD advanced to 1.1374, staying close as the day draws to a close, while GBP / USD is trading at 1.3625, its highest level since November.
Safe-haven currencies advanced modestly against the dollar, with USD / JPY now trading at 115.40. Commodity-linked currencies strengthened, with AUD / USD trading at 0.7210 and USD / CAD dipping to 1.2570.
Gold has risen to $ 1,820 a troy ounce, while crude oil prices were also boosted by a weaker dollar, with WTI currently trading at $ 81.40 a barrel.
Focus now shifts to US inflation figures. The country will release the December Consumer Price Index on Wednesday, forecast at 7% yoy.