USD Dollar

Forex today witnessed a quiet affair in Asia this Friday, with most majors sticking to tight trading ranges amid risk-off trades in the Asian equity markets and persisting US shutdown fears. The US dollar staged a comeback across its main competitors amid an uptick in Treasury yields.

A day after the Federal Reserve raised policy rates and delivered an outlook that was less dovish than traders had anticipated, the liquidation of heavy long positions in the dollar in markets thinned by holidays seemed to be the only explanation for the dollar’s weakness. The safe-haven Japanese yen benefited the most from the brittle sentiment, following by the euro and pound.

Friday’s EUR macro calendar sees a slew of second-liner data releases, kicking-off with the German Gfk consumer confidence survey for January at 07:00 GMT. At 09:30 GMT, the UK final GDP revision for the third quarter will be reported alongside the Q3 current account and public-sector net borrowings figures.

Ahead of the US open, the BOE quarterly bulletin will be published, followed by the US final Q3 GDP and durable orders data release at 13:30 GMT. Next of note remains the US core PCE price index, UoM consumer sentiment and Eurozone Consumer confidence data, all of which due to be released at 15:00 GMT. Later in the day, the US Bakers Hughes oil rigs count data will be reported at 18:00 GMT.

Oil prices inched up on Friday morning in Asia on reports that the OPEC is planning deeper output cuts. OPEC’s Secretary General Mohammad Barkindo on Thursday said that the cartel is planning to release a table detailing output cut quotas for its members and allies such as Russia.

Gold proved again to be the hedge of choice for investors fleeing tumbling stocks and the dollar in the aftermath of the Fed’s latest rate hike. Looking ahead, the broader markets sentiment will continue to play a key role in gold’s price-action while markets await the US durable goods, core PCE price index and Michigan consumer sentiment data for further trading momentum, as volumes thin out into the Xmas holiday break.