Market Update - 13 December 2022

USD/CAD meets with some supply on Tuesday and is pressured by a combination of factors. A further recovery in oil prices underpins the Loonie and exerts pressure amid a softer USD. The downside seems limited as traders look to the US CPI for a fresh impetus ahead of FOMC.

GBP/JPY touches a five-month high on Tuesday, albeit lacks follow-through buying. A generally positive risk tone undermines the safe-haven JPY and remains supportive. The mixed UK jobs data fails to impress bulls or provide a fresh impetus to the cross. Traders also seem reluctant ahead of the UK CPI report and the BoE meeting this week.

GBP/USD picks up bids to reverse early-day losses, prints five-day uptrend. UK Claimant Count Change increased in November, Unemployment Rate rose during three months to October. Market’s cautious optimism, mixed signals surrounding US inflation weigh on the US Treasury yields, US Dollar. US CPI, speech from BOE Governor Bailey will be crucial for clear directions.

EUR/USD gains some positive traction on Tuesday amid a modest USD downtick. A generally positive risk tone undermines the safe-haven buck and offers support. The upside seems limited ahead of the US CPI and the crucial central bank meeting.

The US Dollar Index has dropped to near day’s low around 104.90. Volatility in the US Dollar Index has contracted ahead of the US Inflation release. The 200-EMA at 105.20 is acting as a major barricade for the USD Index. The US Dollar Index (DXY) is displaying wild moves as investors are dwindling ahead of the release of the United States Consumer Price Index (CPI) data.

USD/JPY remains sidelined after rising to an eight-day high. Treasury bond yields snap four-day uptrend, US Dollar stays depressed. Mixed concerns surrounding US CPI, challenges for BOJ’s pivot restrict immediate USD/JPY moves.

EUR/GBP is auctioning below 0.8600 as investors await UK Employment data. Increment in households’ earnings data could be a double-edged sword for the UK economy. The ECB is expected to hike its interest rates by 50 bps to 2.50%.

NZD/USD regains some positive traction on Tuesday amid a modest USD downtick. A positive risk tone and softer US bond yields keep the USD bulls on the defensive. The upside seems capped ahead of the US CPI on Tuesday and FOMC on Wednesday.

AUD/USD recovers from intraday low but stays indecisive on a daily basis. Bearish RSI divergence, rising wedge keeps sellers hopeful even as 100-DMA adds to the downside filters. Recovery remains elusive below 0.6880, weekly high guards immediate upside.

WTI picks up bids to extend recovery from yearly low, seesaws around intraday high. One-week-old descending trend line, nearly overbought RSI challenge oil buyers. Convergence of 50-HMA, previous resistance line restrict immediate downside.

Source: FXStreet, DailyFX

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