Mixed consolidative markets ahead of major events

Here is what you need to know for January 25:

The US Dollar edged lower against the euro and was vulnerable across the board despite solid US manufacturing data that gave some life to otherwise consolidative markets ahead of key events for the days ahead. The markets are in anticipation of inflation data from the forecast[iodeans and the US on Thursday as well as growth updates for the US economy. 

Firstly, eurozone business activity made a surprise return to modest growth in January, which helped to boost the Single currency. EUR/USD was 0.09 % higher at $ 1.0881, just shy of the 9-month high of $ 1.0927 touched on Monday backed by survey data supporting the view that the eurozone economy was fairing well despite intense price pressures. At the start of the week, the euro was bid on the back of European Central Bank (ECB) officials suggesting that the ECB is set to raise interest rates by 50 basis points in both February and March and will continue to raise rates in the months after. 

The US Dollar rose to a near 1-week high against the yen, before giving up those gains but staying above its weakest since May which it visited ahead of a Bank of Japan policy review. However, the BoJ left policy unchanged enabling a move higher in  USD/JPY that touched 131.11 on the day. 

GBP/USD was one of the worst-performing pairs and dropped by 0.34 % on the day to 1.2263 after a survey showed British private-sector economic activity fell at its fastest rate in two years in January. 

USD/CAD was ending near flat on the day after travelling between a low of 1.3346 and a high of 1.3413 so far while US stocks have been volatile making for choppy trading conditions in the forex space on Tuesday.

Meanwhile, the US 10-year yield was 4bp lower at 3.47% and WTI was down 1.8% at USD80.15/bbl. Gold dropped 0.3% to $1,933.3/oz. Bitcoin was little changed on the day at $22,973, steadying after having jumped by about a third in value since early January.

For the day ahead, Aussie and New Zealand inflation data will be key. 


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