Here is what you need to know on Wednesday, December 21:
The US Dollar weakened against its major rivals on Tuesday but seems to be holding its ground early Wednesday. US stock index futures trade in positive territory in the early European morning and the 10-year US Treasury bond yield stays quiet near 3.7%. Existing Home Sales for November will be featured in the US economic docket later in the day and the Conference Board will release the December Consumer Confidence Index. November Consumer Price Index (CPI) figures from Canada will also be looked upon for fresh impetus.
The US Census Bureau announced on Tuesday that Housing Starts and Building Permits in the US declined by 0.5% and 11.2% on a monthly basis, respectively, in November. With these figures reminding investors of the negative impact of the Federal Reserve’s policy on the housing market, the US Dollar lost interest in the second half of the day.
The sharp decline witnessed in USD/JPY on the Bank of Japan’s (BOJ) unexpected policy tweak continued during the American trading hours on Tuesday. After having lost nearly 500 pips and having touched its lowest level in over four months at 130.60, USD/JPY seems to have steadied at around 132.00 early Wednesday. Takatoshi Ito, a contender to succeed BOJ Governor Haruhiko Kuroda, noted that the latest policy action could be the first step toward an exit from the ultra-loose monetary easing. Japanese economy minister Shigeyuki Goto, however, argued that the tweak to the yield curve control strategy was not meant to be an exit from monetary easing, helping the pair limit its losses for now.
EUR/USD registered small daily gains on Tuesday but struggled to gather bullish momentum. The European Commission announced on Tuesday that the Consumer Confidence Index in the Eurozone improved modestly to -22.2 in December’s flash estimate from -23.9 in November. The pair was last seen moving sideways slightly above 1.0600.
GBP/USD struggled to make a decisive move in either direction on Tuesday but managed to close in positive territory. Nevertheless, the pair is having a difficult time pulling away from the 1.2150 area on Wednesday.
Despite rising US Treasury bond yields, XAU/USD capitalized on the selling pressure surrounding the US Dollar and posted impressive gains on Tuesday. Gold price fluctuates near $1,810 early Wednesday.
USD/CAD lost nearly 50 pips on Tuesday and closed near 1.3600. The annual CPI in Canada is forecast to rise to 7.4% in November from 6.9% in October. On a yearly basis, the Core CPI is forecast to edge higher to 6.4% from 5.8%. The pair stays calm at around 1.3600 ahead of the inflation report.
Bitcoin gained nearly 3% on Tuesday but lost its traction before testing $17,000. At the time of press, BTC/USD was trading virtually unchanged on the day at $16,850. Ethereum rose more than 4% closed above $1,200 on Tuesday before going into a consolidation phase near that level early Wednesday.