What to watch out for on Wednesday, December 7th:
The financial markets remained risk-averse, help the US dollar advance on Tuesday. The US currency lost some ground in the first half of the day but gained momentum after Wall Street opened as US indices fell for a fourth straight session.
The US dollar ended the day on new weekly highs, particularly against its high-yielding rivals. The EUR/USD pair is hovering around 1.460, while the GBP/USD is trading in the 1.2140 price zone.
The financial markets reflect the heightened uncertainty about the Federal Reserve’s future actions. The central bank has already hinted at a slowing pace of quantitative tightening this month, despite economic resilience and signs of easing inflation. Both policymakers and investors fear the aggressive pace of tightening will result in a protracted recession.
In the meantime, European Central Bank ECB Governing Council member Constantinos Herodotou said the central bank will hike rates again but warned they are close to neutral
Tensions between Europe and Russia are escalating as Russia considers reducing oil production while imposing a floor on oil sales in response to the G-7 price cap decision.
Crude oil prices fell sharply with the barrel of WTI currently changing hands at $74 a barrel. The USD/CAD pair is rising towards the 1.3660 price zone where it is currently trading.
The AUD/USD pair ended the day at 0.6680, following the lead of the shares and despite a hawkish RBA. Safe haven CHF and JPY pared their early gains against the dollar and the pair ended the day fairly flat.
Spot gold tried to gain ground but ended unchanged at around $1,770 an ounce on Tuesday.
Australia is due to release its Q3 gross domestic product early Wednesday and the economy is expected to have grown at an annualized pace of 6.3%.
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