Forex Today: Optimism hits the US Dollar

FX

What you need to take care of on Tuesday, January 10:

The US Dollar started the week on the back foot as optimism weighed on the safe-haven currency. On the one hand, market players assessed US macroeconomic data published last Friday, which suggests the Federal Reserve could slow the pace of tightening.

Federal Reserve officials backed such speculation, as San Francisco Fed President Mary Daly said that 50 bps or 25 bps are on the table for the next meeting. Atlanta Federal Reserve bank president Raphael Bostic added rates should rise to 5% or 5.25%. Both pledged more hikes to tame inflation before they could finally pause and hold for some time.

On the other, China announced the re-opening of sea and land crossings with Hong Kong, which were closed three years ago. Asian stocks posted substantial gains, leading the way higher for their overseas counterparts. It is worth noting that Wall Street trimmed a good bunch of its intraday gains ahead of the close.

EUR/USD reached 1.0760, holding on to gains despite tepid Euro Zone data. GBP/USD trades at 1.2200, benefiting from the broad US Dollar weakness.

Commodity-linked currencies advanced at the beginning of the day, spending the last two sessions consolidating near their daily peaks vs the dollar. AUD/USD trades around 0.6930, while USD/CAD is down to 1.3370.

The Japanese Yen appreciated against the US Dollar, with the pair down to 131.50.

Gold holds on to gains and trades around $1,875 a troy ounce. However, crude oil prices ended the day little changed, with WTI currently changing hands at $74.70 a barrel.

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