2023 In Review: A Look Back At The Highlights Of The Year

The year 2023 commenced after two years of economic uncertainty and heavy inflation across Europe and North America, home to leading financial markets, with major currencies such as the euro and the US dollar, and financial hubs including London, New York, Chicago, Frankfurt, and Toronto.

Canadian Dollar Posts Another Strong Week

The Canadian dollar is showing limited movement on Tuesday. In the European session, USD/CAD is trading at 1.3248, down 0.14%. Canadian banks are closed for a holiday, which means it should remain an uneventful day for the Canadian dollar. As there are no Canadian events this week, US releases could have a magnified impact on the movement of the Canadian dollar.

Rally Extends

The barrel of American crude finally cleared the $74/75pb resistance range on the mounting geopolitical tensions in the Red Sea and traded at $76pb on Tuesday. Yet the bullish market reaction looks relatively week given the amplitude of the issues in the region. The rally will likely continue at a gentle speed. The next natural target for oil bulls stands at 200-DMA, near $78pb, but the price should meet solid resistance at this level due to weak momentum.

USD/JPY Steady, BoJ Releases Summary of Opinions

The Japanese yen continues to have a quiet week. In the European session, USD/JPY is trading at 142.54, up 0.12%. The Bank of Japan’s summary of opinions from the December meeting was released earlier today. That meeting was somewhat of a disappointment to the markets, as there were expectations of a move after senior BoJ members hinted prior to the meeting that the Bank was looking to lift interest rates out of negative territory. In the end, the BoJ stayed put and maintained policy settings.

Swiss Franc Hits 9-Year High

The Swiss franc is slightly lower in Wednesday trade. In the North American session, USD/CHF is trading at 0.8509, down 0.31%.

Rally in Stocks and the Selloff in US Dollar Looks Overstretched

The US bond and stocks extended their rally on the back of soft US economic data and another strong US bond auction. The US dollar fell sharply against most majors, allowing the euro, sterling, and the yen to extend gains into the year end. The rally in the sovereign space looks overdone, hence the rally in stocks and the selloff in US dollar looks overstretched; there is a rising risk of a wild correction when the euphoria comes to an end.

Pound Sterling Rallies on Improved Risk Appetite

The Pound Sterling (GBP) prints a fresh four-month high as investors hope that the Bank of England (BoE) will maintain a restrictive monetary policy stance for a longer period than other Group of Seven economies. The GBP/USD pair has continued its four-day winning streak as the market mood is quite cheerful due to early rate cut expectations from the Federal Reserve (Fed).

Japanese Yen Keeps on Rolling

Japanese releases were a mixed bag today. Retail sales impressed with a gain of 5.3% y/y in November, following a downwardly revised 4.1% gain in October and beating the market consensus of 5.0%. Monthly, retail sales climbed 1%, rebounding from a 1.6% decline in October.

AUD/USD Eyes Chinese PMIs

The Australian dollar has edged lower on Thursday. In the European session, AUD/USD is trading at 0.6833, down 0.21%. Earlier today, the Aussie climbed as high as 0.6871, its highest level since July.

EUR/USD Steady as Spanish CPI Lower than Expected

Spain released the December inflation report today, with CPI dipping to 3.1% y/y, down from 3.2% in November. This was better than expected as the consensus estimate stood at 3.4%. The reading was the lowest rate since August, with the drop attributed to lower prices for fuel, food and electricity. Monthly, CPI rose from -0.3% to 0.0%, but this was lower than the consensus estimate of 0.3%. Core CPI dropped to 3.8% y/y, down from 4.5% in November.