Here is what you need to know on Wednesday, December 22:
The greenback struggled to find demand on Tuesday amid a positive shift witnessed in risk sentiment. Rising US Treasury bond yields, however, helped the dollar limit its losses and the US Dollar Index seems to have gone into a consolidation phase around 96.50 early Europe. Later in the day, the US Bureau of Economic Analysis will release its final revision to the annualized GDP growth for the third quarter. The Conference Board’s December Consumer Confidence and November Existing Home Sales data will be featured in the US economic docket as well.
Despite a lack of positive developments surrounding the Omicron variant, Wall Street’s main indexes managed to register strong gains on Tuesday with investors seeing the latest drop as an opportunity for bargain shopping. The benchmark 10-year US Treasury bond yield came within a touching distance of 1.5% but retreated modestly before turning quiet around 1.46% early Wednesday. US stocks futures are trading flat, suggesting that the risk rally has already lost its momentum.
EUR/USD tested 1.1300 for the second straight day on Tuesday but ended up closing the day virtually unchanged near 1.1280. The monthly data published by the European Commission showed that consumer sentiment deteriorated in the eurozone with the Consumer Confidence Index falling to -8.3 (preliminary) in December from -6.8 in November. The pair is currently trading in the negative territory around 1.1270.
GBP/USD is trading in a tight channel around 1.3250 early Wednesday as investors showed little to no reaction to the latest data releases from the UK. The Office for National Statistics reported that the annualized GDP grew by 6.8% in the third quarter, coming in better than the market expectation of 6.6%. Additionally, Total Business Investment in the UK contracted by 2.5% on a quarterly basis in the third quarter.
USD/JPY capitalized on rising US Treasury bond yields and climbed to its strongest level in a week above 114.00. The pair is consolidating Tuesday’s gains around 114.20.
Gold lost its traction after testing $1,800 on Tuesday and retreated to $1,790 area, pressured by recovering US Treasury bond yields. As it currently stands, XAU/USD could find it difficult to attract buyers unless it flips $1,800 into support.
USD/CAD closed modestly lower on Tuesday as the upbeat Canadian data, which showed that Retail Sales rose by 1.6% in October, helped the loonie stay resilient against its American counterpart. The pair is staying quiet around 1.2900 in the early European session.
Bitcoin registered decisive gains on Tuesday and continues to edge higher toward the critical $50,000 mark. Ethereum closed in the green for the second straight day on Tuesday and looks to settle above $4,000.