Forex Today: US Dollar to keep strengthening ahead of FOMC Minutes

What you need to take care of on Wednesday, January 4:

The US Dollar returned with a vengeance on Tuesday and soared against all of its major rivals. The greenback started the day on the back foot, but gained ground early in the European session, triggering stops and further accelerating its advance.

Financial markets were optimistic at the beginning of the day, with Asian shares up amid signs coronavirus infections may have peaked in China. Hopes the country will soon reverse the latest economic downturn faded, as the session developed, with Asian indexes ending the day around their opening levels. European and American indexes also advanced, although Wall Street quickly changed course and finished the day in the red.

EU countries reached an agreement on a coordinated approach to the  COVID-19 situation, including implications for increased travel from China, according to the EU Health Security Committee Meeting.

On a positive note, Germany released the preliminary estimate of the December Harmonized Index of Consumer Prices (HICP), which rose at an annual pace of 9.6%, well below the 10.7% expected, and easing from 11.3% in November.

 EUR/USD trades at around 1.0550, and in the wider perspective the slump seems corrective. The Pound was the most resilient, down to 1.1975 against the greenback. AUD/USD trades around 0.6730, while USD/CAD soared to 1.3680. Finally, USD/JPY ended the day little changed around 130.70 after trading as low as 129.49.

Gold soared to $1,850 and later retreated, ending the day with gains at around $1,836 a troy ounce. Crude oil prices collapsed, with WTI trading at around $76.70 a barrel.

Attention shifts to the US as the country will release the ISM Manufacturing PMI and the FOMC Meeting Minutes on Wednesday.

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