Forex Today: US Dollar gains on market concerns

What you need to take care of on Wednesday, January 3:

The US Dollar was the overall winner on Tuesday, appreciating sharply against all its major rivals. Investors returned to the USD following signs of tepid global growth at the end of 2024. S&P Global released the December Manufacturing PMIs for several major economies, all of which indicated economic contraction persisted.

S&P Global  EU index was reported at 44.4, slightly better than the previous 44.2. In the UK, manufacturing output resulted at 46.2, worsening from the previous 46.4 and missing expectations. The US PMI came in at 47.9, contracting from the previous 48.2, while the Canadian index contracted to 45.4. Tepid growth figures made market players rethink the aggressive betting on upcoming rate cuts among the most developed economies.

EUR/USD plunged to 1.0940, settling a handful of pips above the level. GBP/USD trades near 1.2600, while commodity-linked currencies are among the biggest losers, with AUD/USD hovering around 0.6760 and USD/CAD at around 1.3320.

Finally, the USD/JPY trades around 142.00, while Gold saw little action, ending the day with modest losses at around $2,060 a troy ounce.

Government bonds edged lower, pushing yields to their highest since mid-December. Wall Street turned south, and the three major indexes posted daily losses.

Wednesday will bring some relevant US figures, including the December ISM Manufacturing PMI, November JOLTS Job Openings and the Federal Open Market Committee (FOMC) Minutes. The latter could be relevant after Chairman Jerome Powell mentioned rate cuts after the latest Federal Reserve (Fed) monetary policy decision. There will not be data released through the Asian session.