Market news

25 January 2023

Forex Today: Choppy action continues, eyes on BOC

Here is what you need to know on Wednesday, January 25:

Markets remain indecisive mid-week as investors look for the next significant catalyst. The US Dollar Index stays near 102.00 following Tuesday's failed recovery attempt and the 10-year US Treasury bond yield stays slightly below 3.5%. Meanwhile, US stock index futures trade in negative territory, pointing to a cautious market mood in the European morning. IFO sentiment surveys from Germany will be featured in the European economic docket. Later in the day, the Bank of Canada (BoC) will announce its policy decisions.

On Tuesday, S&P Global PMI surveys from the US showed that the economic activity in the private sector continued to contract in early January with the Composite PMI arriving at 46.6. In the press release, "the rate of input cost inflation has accelerated into the new year, linked in part to upward wage pressures, which could encourage a further aggressive tightening of Fed policy despite rising recession risks," noted Chris Williamson, Chief Business Economist at S&P Global Market Intelligence. This comment helped the US Dollar outperform its rivals but the late rebound witnessed in Wall Street's main indexes made it difficult for the currency to preserve its strength.

During the Asian trading hours on Wednesday, the data from Australia showed that the Consumer Price Index (CPI) climbed to 7.8% on a yearly basis in the fourth quarter from 7.3%. With this reading surpassing the market expectation of 7.5%, market participants reconsidered the odds of the Reserve Bank of Australia (RBA). In turn, AUD/USD gained traction and was last seen trading at its highest level since mid-August at 0.7110, rising nearly 1% on a daily basis.

Statistics New Zealand reported on Wednesday that the annual CPI in the fourth quarter remained steady at 7.2%. New Zealand’s new Prime Minister (PM) Chris Hipkins said inflation was putting a strain on household budgets and added that more must be done to combat high inflation. Unlike AUD/USD, NZD/USD failed to gather bullish momentum after inflation data and was last seen posting small daily losses slightly below 0.6500.

USD/CAD closed the fourth straight trading day in negative territory on Tuesday and continued to push lower toward 1.3350 early Wednesday. The BoC is forecast to raise its policy rate by 25 basis points to 4.5%.

Bank of Canada Preview: The final one, with a pause ahead?

USD/JPY continues to trade in a relatively tight range above 130.00 as market participants try to figure out how the Bank of Japan's (BoJ) monetary policy will be shaped when the new governor takes over. Eiji Maeda, a former BoJ Executive Director in charge of monetary policy during the pandemic, told Bloomberg that it was more likely than not that the BoJ will take steps within the first six months of a new governorship.

EUR/USD managed to regain its traction after dropping toward 1.0830 with the initial reaction to US PMI data on Tuesday. The pair was last seen trading in positive territory a few pips above 1.0900.

GBP/USD closed the second straight day in negative territory on Tuesday but didn't have a difficult time holding above 1.2300. Nevertheless, the pair is having a hard time erasing its losses early Wednesday as markets keep a close eye on political developments in the UK.

After having spent the first half of the day fluctuating in a narrow channel, Gold price fell sharply in the early American session before reversing its direction. With the 10-year US Treasury bond yield dropping below 3.5% late Tuesday, XAU/USD registered its highest daily close since April. Early Wednesday, the pair stays in a consolidation phase slightly above $1,930.

Bitcoin lost more than 1% on Tuesday but didn't have a hard time finding support. At the time of press, BTC/USD was posting small daily gains at around $22,700. Ethereum extended its downward correction and erased more than 4% on Tuesday before stabilizing slightly above $1,500 early Wednesday.

Market Focus

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade to contact me about the information I have selected.
23 International Awards
Have a question?

We are ready to assist you in every step of your trading experience
by providing 24/5 multilingual customer support.

Follow us

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.94% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

© 2011-2023 Teletrade-DJ International Consulting Ltd

This website is operated by Teletrade-DJ International Consulting Ltd, which is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11. Teletrade-DJ International Consulting Ltd is located at 88, Arch. Makarios Avenue, 2nd floor, Nicosia Cyprus.

The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, TeleTrade uses cookies in our web services. By continuing to browse this site you agree to our use of cookies.

Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77.94% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Choose your language/location