Fundamental analysis GBPUSD, EURUSD, NZDUSD, AUDUSD, USDCAD, XAUUSD, Brent, WTI for 06.01.2022
The minutes of the latest Fed meeting published yesterday made the dollar an even more attractive asset to invest in. It became clear that the regulator does not intend to make adjustments to monetary policy, despite the emergence of another strain of COVID-19. The employment data are very positive, as evidenced by ADP report, inflation remains high, so the Fed is ready for a rapid unwinding of stimulus and a rate hike. Moreover, many members of the Open Market Committee are aimed at reducing the balance sheet after the first key rate hike in 2022. As a result, ten-year bond yields reached 1.7% and the dollar strengthened against commodity currencies.
Today USD ignored the increase in initial jobless claims as the key macroeconomic statistics on employment will be released tomorrow at 15:30 (GMT+2). Earlier ADP reported strong private sector employment growth, so investors expect a positive report from the Bureau of Labor Statistics tomorrow.
EUR/USD strengthened on Monday, but failed to hold above the strong psychological level of 1.1300. The market did not react to the downward revision of the business activity indicator, as the major Eurozone economies are softening the social distance measures.
GBP/USD demonstrated growth on Wednesday thanks to positive macroeconomic data on business activity. The index slowed down but was better than forecasted. Also the British Prime Minister Boris Johnson said that the British government would not strengthen quarantine measures and would relax requirements for vaccinated tourists as Omicron exposure is much easier to tolerate than the delta strain.
Commodity currencies were the top losers Wednesday and continue to fall as the dollar strengthens. AUD/USD, NZD/USD declined as investors' risk appetite dropped. Additional pressure is coming from the difficult epidemiological situation, which doesn't allow the economy to recover after a long lockdown. USD/CAD is becoming cheaper after growth the day before. Recovery of the hydrocarbon market provides support to the Canadian currency. Also the pair went down after the negative statistics on the labor market and trade balance in the U.S. that was published today. At the same time the authorities of Canada are imposing new restrictions. Mass events are prohibited, cafes and restaurants are open only for takeout or delivery, and some Canadian provinces have introduced curfews.
Oil market is strengthening on the background of the decrease of the US stocks and complicated geopolitical situation in some regions. Brent and WTI moved to active growth due to supply disruptions from Kazakhstan and Libya.
XAU/USD is again losing its "safe haven" status. The Fed meeting minutes made investors refuse to buy precious metals.