Forex Today: US Dollar takes advantage of a dismal market mood

What you need to take care of on Wednesday, December 7:

Financial markets remained risk-averse, helping the US Dollar to advance on Tuesday. The American currency shed some ground throughout the first half of the day, but gathered momentum after Wall Street’s opening as US indexes fell for a fourth consecutive session.

The American Dollar finished the day at fresh weekly highs, particularly against its high-yielding rivals. The EUR/USD pair hovers around 1.460, while GBP/USD trades in the 1.2140 price zone.

Financial markets reflect increased uncertainty about the US Federal Reserve’s future actions. The central bank has hinted at an easing pace of quantitative tightening starting as soon as this month, despite economic resilience and signs of easing inflation. Both, policymakers and investors fear the aggressive pace of tightening will result in a long-lasting recession.

Meanwhile, European Central Bank Governing Council member Constantinos Herodotou said the central bank would hike rates again but warned they are near the neutral rate

Tensions between Europe and Russia escalate, as the latter is considering reducing oil production while setting a floor for oil sales in response to the G-7 decision to cap prices.

Crude oil prices were sharply down, with the barrel of WTI currently changing hands at $74 per barrel. The USD/CAD pair surged towards the 1.3660 price zone, where it currently trades.

The AUD/USD pair ended the day around 0.6680, following the lead of stocks and despite a hawkish RBA. Safe-haven CHF and JPY trimmed early gains vs the dollar and the pair ended the day pretty much unchanged.

Spot gold attempted to recover ground but closed Tuesday unchanged at around $1,770 a troy ounce.

Australia will publish its Q3 Gross Domestic Product early on Wednesday, and the economy is expected to have grown at an annualized pace of 6.3%.