Another batch of optimistic economic data from the United States was revealed. In September, retail sales increased 0.7%, exceeding the market consensus of 0.3%. The August figures were revised upward. In September, industrial production climbed by 0.3%, beating forecasts for a flat result. These encouraging numbers initially lifted the US dollar, but the effect was fleeting. The DXY finished with slight losses near 106.20.
While US Treasury yields increased considerably, rising yields across the Atlantic negated the dollar’s impact. The 10-year Treasury yield increased to 4.86%, while the German benchmark yield increased by 3.50% to 2.88%.
Despite the encouraging economic news, Wall Street was divided. The Dow increased 0.04%, while the Nasdaq fell 0.25%. The earnings season continues on Wednesday, with results from Tesla, Morgan Stanley, Abbott, Netflix, and other corporations.
The Japanese Yen (JPY) rose sharply in the European session in response to rumours that the Bank of Japan (BoJ) was expected to modify its inflation prediction for fiscal years 2023 and 2024. However, the Yen’s surge was short-lived, as it later reversed, wiping out all of its gains. Following strong US retail sales data, the USD/JPY pair established support around 148.75 and gained gains, breaking over 149.70. The pair is currently reaching the 150.00 level, which is regarded as a potentially critical region for government action.
The Euro (EUR) gained ground against the Swiss Franc (CHF) and the British Pound (GBP), aided by rising Eurozone bond yields. The EUR/USD pair briefly reached 1.0600 before reversing, however it remained above the 1.0560 mark. The Eurozone will publish the final readings of the September Consumer Price Index (CPI) and August Construction Output.
The GBP/USD pair is still trading in a range between 1.2130 and 1.2225, with no discernible direction. The market is now looking forward to the announcement of UK inflation data later today.
The Canadian Dollar (CAD) fell across the board as Canada announced a 0.1% drop in the Consumer Price Index (CPI) for September, despite expectations for a 0.1% increase. Annual inflation has fallen from 4% to 3.8%. USD/CAD originally traded above 1.3700 but then fell back to around 1.3640, wiping out its gains.
The New Zealand Dollar (NZD) remained sluggish throughout the Asian session, weighed down by the lower-than-expected New Zealand Q3 inflation figure. The NZD/USD pair pared losses throughout the American session but concluded weaker, just around 0.5900. The pair is currently trading at the 0.5860 critical support level.
The Australian Dollar (AUD) outperformed on Tuesday, helped by hawkish minutes from the latest Reserve Bank of Australia (RBA) meetings. The AUD/USD pair gained for the second day in a row, but it encountered resistance when it reached the 20-day Simple Moving Average (SMA) at 0.6380 and subsequently retraced to 0.6360. RBA Governor Bullock will speak at the Australian Financial Security Authority Annual Summit Panel on Wednesday.
Despite rising rates, gold gained but failed to reclaim levels over $1,930. Silver rose significantly to $22.35, approaching $23.00.
Please note that this article does not offer any instructions or suggestions regarding investment decisions. Therefore, it is essential that you carefully evaluate your financial situation and conduct thorough analysis, or seek advice from a qualified professional, before making any investment decisions.