This is what you need to know to trade today Wednesday January 18:
The US dollar’s recovery from multi-month lows gains strength early Wednesday, triggering a new wave of selling in the currency market. The main catalyst for the resurgence in demand for the US dollar is the Bank of Japan (BoJ) decision to keep monetary policy settings and yield curve control policy unchanged in its first review this year. The BoJ’s inaction, despite market pressure to act, triggered a sharp sell-off in the Japanese yen, which sent the USD/JPY through the roof. The global bond market breathed a sigh of relief as the BoJ’s latest move sent the 10-year Japanese Government Bond (JGB) yield falling to around 3.60%, down 13.5 basis points or a whopping 27% to date. US Treasury yields also fell in parallel, holding back the dollar’s rise. The USD/JPY pair reached 131.57 before pulling back near 130.85, still up more than 2% on the day.
Markets remained jittery after a mixed close on Wall Street as traders digested lackluster earnings reports from US banks. The benchmark Japanese index, the nikkei 225, shot up 2.50% in reaction to the Bank of Japan’s blow. The futures of S&P 500 US firms are defending smaller offers ahead of a fresh batch of US corporate earnings results, retail sales and Producer Price Index (PPI) data which will be posted later in the day.
The AUD/USD and the NZD/USD consolidate earnings, pending the scheduled meeting between the US Treasury Secretary, Janet Yellenand Chinese Vice Premier, Liu He. Meanwhile, the USD/CAD pulls back below 1.3400 amid persistent bullish price WTI. US oil is trading near $81.50, given OPEC’s optimistic outlook for Chinese oil demand.
The pair EUR/USD looks vulnerable below 1.0800 amid stronger US dollar, while Euro continues to feel the pain from dovish ECB report. Bloomberg reported on Tuesday, citing sources, that the European Central Bank (ECB) was considering a slower pace of interest rate hikes, with the prospect of a 25 basis point rate hike after a 50 basis point rise in February. Traders will await the second revision of the Eurozone HICP data after the strong ZEW survey from Germany on Tuesday.
The pair GBP/USD it remains close to 1.2300 pending the release of the UK Consumer Price Index (CPI). Other weak UK CPI data is likely to encourage the Bank of England (BoE) to slow its pace of tightening or stop it altogether. The pair rose on Tuesday after the UK labor market report showed strong wage growth in November.
The price of Prayed It is keeping its downward correction intact, although it did recapture the $1,900 level early in the European session amid falling US Treasury yields. The near-term technical setup points to further declines.
The Bitcoin holds gains above the $21,000 level, with no clear directional bias, while the ethereum challenges the $1,600 barrier amid multiple bearish signals.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
