January 27, 2022
USD/JPY: USD/JPY showed a bullish dynamic yesterday due to the hawkish Fed announcement. The pair traded at 114.75 and refreshed its weekly high during the Thursday session. The dollar rose to its three-week high the US Federal Reserve matched market expectations signaling the interest rate hikes amid inflation concerns. The US Federal Reserve kept interest rates without any changes as well as its tapering targets and schedule. As for the macroeconomic data, US housing numbers improved in December while Japan’s Foreign Bond Investment became negative, which could support the USD/JPY in the medium-term period.
USD/CAD: The Loonie pair couldn’t support the Bank of Canada’s hawkish mood on Wednesday, having fallen against the US dollar as the US Federal Reserve matched the market expectations. Despite this, strong WTI crude oil prices, Canada’s main export commodity, allowed the price to pull back from a local high. It’s also important to note that the fears of supply outage due ignored the dovish EIA Crude Oil Stocks Change, having kept WTI oil prices near the highest levels marked since 2014. Moving on, geopolitical risk catalysts may play a significant role for Loonie traders, but key attention will be given to the first readings of the US GDP data and Durable Goods Orders for December.
Gold: Gold was bearish during the Asian trading session after the market’s volatility overnight. Jerome Powell surprised markets with a hawkish pivot, having announced that the Fed could raise rates at every meeting if needed. Additionally, he said that the Fed could do it faster and sooner than they did the last time, which helped the US dollar to extend its gains as US 2 year bonds yields showed the biggest daily gain since 2020.