Global markets are treading cautiously early on Tuesday as investors closely monitor headlines surrounding the Chinese property crisis and escalating geopolitical tensions. Key events on the economic calendar include the release of fourth-quarter Gross Domestic Product (GDP) growth figures from Germany and the Eurozone. Later in the day, the Conference Board will publish the US Consumer Confidence Index data for January, while the Bureau of Labor Statistics is set to release the JOLTS Job Openings report for December.
The US Dollar Index made a climb towards 104.00 on Monday but faced a loss of traction in the late American session. The upbeat performance of technology stocks, particularly the Nasdaq Composite gaining over 1% on the day, challenged the US Dollar’s strength. Concurrently, the benchmark 10-year US Treasury bond yield dipped below 4.1%, adding pressure on the USD.
Early on Tuesday, major equity indexes in Asia experienced bearish pressure following reports of Hong Kong’s High Court ordering the liquidation of Evergrande Group. At the time of press, Hong Kong’s Hang Seng Index was down 2% on the day, and the Shanghai Composite was losing more than 0.5%.
In the geopolitical arena, CNN reported that US President Joe Biden’s response to Sunday’s deadly attack on a US military is anticipated to be more forceful than previous retaliatory actions. While Biden is expected to authorize military action, experts express growing concerns over a potential deepening conflict in the region. During the European session on Tuesday, US stock index futures traded marginally lower on the day.
The EUR/USD pair dropped below 1.0800 for the first time in over a month on Monday but managed to stage a technical correction, holding steady above 1.0800 early on Tuesday. Forecasts suggest the German economy may contract at an annual rate of 0.2% in the fourth quarter, with the Eurozone economy expected to stagnate during the same period.
GBP/USD edged lower on Monday but maintained a relatively stable position around 1.2700 on Tuesday.
Japan’s Prime Minister Fumio Kishida, addressing parliament on Tuesday, expressed a commitment to do everything possible to bolster household income, highlighting that wage hikes are an urgent issue for his administration. USD/JPY closed in negative territory on Monday, declining below 147.50 early on Tuesday.
Australian Retail Sales data revealed a 2.7% monthly decline in December following November’s 2% increase. Despite the disappointing data, AUD/USD edged higher in the Asian session and was last seen trading above 0.6600.
Gold experienced a boost on Monday, benefiting from retreating US yields and escalating geopolitical tensions, rising over 0.5% on a daily basis. XAU/USD held steady slightly above $2,030 early on Tuesday.