GBPUSD stays firmer on downbeat US Dollar ahead of PMI numbers

Anti-US Dollar moves return to the table during a sluggish start to Tuesday, after a failed attempt to pare the greenback’s losses the previous day. The growing concerns over the Fed policy pivot and the ECB hawks’ dominance appeared to have played a major role. In doing so, the greenback also traces the downbeat Treasury yields but ignores the challenges to sentiment emanating from the US-China chatters and cautious mood ahead of the key activity data for January.

With the softer USD, the prices of gold refresh a nine-month high while crude oil also grinds higher despite fears of more US supplies. The same allows the GBPUSD pair to ignore fresh negatives from home while regaining the upside momentum while the EURUSD rises for the fourth consecutive day. Further, USDJPY benefits the most from the USD weakness while paying little heed to the mixed Japan PMIs while USDCNY refrained from cheering the same amid China’s week-long holidays.

Elsewhere, BTCUSD and ETHUSD regain upside momentum towards the multi-month high marked in the last week as US Dollar weakness joins hopes of more recovery on the crypto front.

Following are the latest moves of the key assets:

• Brent oil grinds near $88.00 after refreshing a seven-week high the previous day.
• Gold rises to a fresh high since April, up 0.45% near $1,940 at the latest.
• USD Index drops back below 102.00, down 0.21% on a day by the press time.
• Wall Street closed in the green but stocks in the Asia-Pacific region, as well as equities in Europe and the UK, trade mixed at the latest.
• BTCUSD and ETHUSD seesaw near the multi-day high, close to $23,100 and $1,650 as we write.

Nothing but the US Dollar weakness is the key

Although the market sentiment remains dicey, the US Dollar remains depressed as traders are surer of the Fed’s nearness to exit from the tighter monetary policy. The market sentiment took clues from the recently downbeat US data and comparatively more hawkish comments from the other central banks. In doing so, the greenback fails to justify fresh negatives surrounding the US-China ties, mainly due to Beijing’s alleged support of the Russian war. Additionally, the upbeat US inflation expectations also fail to recall the USD buyers.

On the other hand, China reopening inspired optimism that keeps fueling the Gold price and was joined by the upbeat comments from the ECB policymakers to please EURUSD bulls. Further, USDJPY also magnified the USD weakness as hopes of BoJ’s exit from easy-monetary policy gained major attention.

It should be noted that the Gold rallies and the crude oil also tries to battle with the US readiness to release more strategic petroleum reserves if needed amid the softer US dollar. Moving on, the GBPUSD also ignores the record deficit in the UK and fresh Brexit woes to remain firmer ahead of the UK PMIs due to the downbeat US Dollar.

Talking about cryptos, the sigh of relief that the worst is over for the BTCUSD and ETHUSD, mainly due to the FTX fiasco, joined the weaker US currency to please the crypto buyers even if the industry news isn’t too impressive.

• Strong buy: GBPUSD
• Strong sell: ETHUSD, USDJPY
• Buy: USD Index, USDCAD, Nasdaq, EURUSD
• Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

PMIs, central bankers in focus

While the first readings of the activity data for January 2023 are the key for today’s trading decisions, speeches from policymakers of the ECB and the BoE are also likely to entertain the traders. Additionally, talks over the Sino-American tussles and Fed-linked rumors may add momentum to the markets. Above all, Thursday’s US GDP and the next week’s FOMC is the key to clear directions.

May the trading luck be with you!