Forex Today: Risk appetite undermines demand for the greenback

What you need to know on Friday, December 24:

 The dollar edged lower amid a positive market’s mood with all global indexes posting daily gains. The exception was USD/JPY, as the pair edged higher and settled at 114.45, nearing its yearly high.

US Treasury yields advanced, with the 10-year note currently hovering near its daily high of 1.501%. The advance followed US inflation-related figures, as the core PCE Price Index jumped to 4.7% in November from 4.2% previously and above the 4.5% expected.

Other US macroeconomic figures were also encouraging, as November Durable Goods Orders, which rose 2.5%, beating expectations. Initial Jobless Claims for the week ended December 17 printed at 205K as expected. Also, the December Michigan Consumer Sentiment Index was upwardly revised to 70.6 from 70.4.

In the COVID-19 front, news indicated that the US Food and Drug Administration authorized a second medication, a Merck drug named Molnupiravir, to treat covid at home after clearing the Pfizer poll on Wednesday. However, Merck’s pill is less effective and carries more risks than the Pfizer one. The mood was underpinned by a research conducted in South Africa, which found that it is a milder strain than Delta.

The EUR is among the dollar’s weakest rivals, confined to familiar levels. The pair currently trades around 1.1330, after briefly piercing the 1.1300 level. The GBP/USD pair peaked at 1.3437, a fresh December high, retaining the 1.3400 level at the end of the day. The Pound kept rallying on the back of upbeat UK growth figures released on Wednesday.

Higher stocks backed underpinned commodity-linked currencies. AUD/USD hit 0.7250, while USD/CAD ell to 1.2797, both holding nearby at the end of the day.

Japan will operate normally, although other Asian markets are due to early closes. Most American and European markets will remain closed on Friday amid the Christmas Holiday.

Volatility is expected to remain subdued in the next few days, with chances of sudden short-lived movements in between.

Gold trades near an intraday high of $1,810 a troy ounce, poised to extend gains once beyond the 1,815 resistance. Crude oil prices maintained their positive tone, with WTI posting a modest advance and settling at $73.75 a barrel.

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