USD starts 2023 with whipsaw movement

The holiday season has come to an end as the market moves accelerated and the macro calendar has finally been filled with data. Tuesday and Wednesday were all about the whipsaw move on the American Dollar. First, we saw the strengthening of the USD and then complete pullback which brought back all the previous gains. On many instruments it created false breakouts – a great signal to trade in the opposite direction.

On Tuesday, the Dollar was by far the strongest currency in the field, but the situation took a turn and today it is the weakest one. Interestingly enough, the place at the top today does go to a dollar – the Australian one. What is the reason behind this? The news say that China is considering ending the ban on coal from Australia, which is definitely great news for the exporter, and this is why their currency is currently climbing higher. Let’s see how this story will develop.

The last few days have been ambivalent for commodities. Oil and gold are moving in completely different directions. Oil drops after bouncing off the key down trendlines, while gold is climbing higher and establishing new mid-term highs. On Brent and WTI we have full technical sell signals stemming from the fact that the price escaped a bullish correction. Yesterday, the slide exceeded 4% and today, sellers are already adding another 1.7%. On gold, the price escaped a technical pattern as well but, in this case, from the channel up to the upside, which should be always considered an impressive show of strength.

On indices, we can see that Europe and America temporarily broke the usual correlation. American indices are still trading in a sideways trend hovering around 0% change, while DAX and a few other European indices are rising decisively, giving a short-term signal to buy.

Today’s calendar brings some tea – we already saw inflation data from Switzerland, where the drop in inflation was slightly more than expected (-0.2% vs -0.1%). Later today, we will have a pack of news from the USD. The top tier event is the Meeting Minutes from FED. Also important will be the ISD Manufacturing PMI and JOLTS Job Openings – the data should definitely rock the Dollar boat today.