Markets Report - 03 January 2023

A daily breakdown of the markets for the 3rd January 2023, provided to you by Sterlex.

🇪🇺💶The recent hawkish comments from European Central Bank policymaker Joachim Nagel also fail to offer any support to the Euro, as EUR/USD sheds 0.90% to trade at 1.0570, at the time of writing. EUR/USD is heavily sold off below 1.0600, correcting sharply from two-week highs above 1.0700. expectations of +15K in the reported period. All eyes now turn toward the German inflation data for fresh trading impetus. Germany’s Unemployment Rate dipped to 5.5% in December while the Unemployment Change dropped by 13K vs. Meanwhile, an unexpected improvement in the German labor market is doing little to please Euro bulls. The sharp upswing in the US Dollar across the board is smashing the Euro, despite the upbeat market environment.

🇬🇧💷After having spent the Asian session in a very tight range slightly below 1.2100, GBP/USD fell sharply in the European morning and touched its lowest level in a month near 1.1900. Additionally, the first of five consecutive days of national rail strikes have gone underway on Tuesday. The pair was last seen losing 1.1% on the day at 1.1915. Meanwhile, political jitters in the UK seem to be putting additional weight on the Pound Sterling. The Telegraph reported over the weekend that British Prime Minister Rishi Sunak had shelved the childcare reform that was designed to help parents save money and return to work.

🇺🇸 🏦In absence of any high-impact data from both sides of the Atlantic, risk trends and the US Dollar price action will continue, although the US S&P Global Manufacturing PMI could offer some trading incentives to Cable. Upbeat Chinese Caixin Manufacturing is helping lift the overall market mood, with the US S&P 500 futures wiping out entire losses. Strategists at Citigroup are of the opinion that the Minutes of the US Federal Reserve (Fed) December meeting could underscore the divergence between doves and hawks on how high the terminal rate should go. As the broad market sentiment is improving, the safe-haven US Dollar is fading its recovery attempts amid a subdued performance in the US Treasury bond yields. The fresh move lower in the US Dollar is also driven by the USD/JPY sell-off, as the Japanese yen rallies hard on speculations that the Bank of Japan (BoJ) is on course to exit from its ultra-loose easy monetary, as the year 2023 kicks in.