All you need to understand on Wednesday, January 26, is as follows:

In response to safe-haven inflows, the US Dollar Index (DXY) rose to its highest point in more than two weeks on Tuesday, reaching 96.27.

With Wall Street’s main indexes recovering just a little from their daily lows before the closing bell, the DXY fell and appears to have entered a consolidation phase early Wednesday.

Monetary Policies

The Federal Reserve of the United States will release its fiscal policy choices later in the day. The December Goods Trade Balance and New Home Sales will be included in the economic calendar for the United States.

After its January session comes to a close, the Bank of Canada will provide its Financial Regulation Report to the public.

It is largely anticipated that the Federal Reserve will maintain its benchmark interest rate in January. Investors anticipate a signal from the Federal Open Market Committee (FOMC) that a 25 basis point rate rise will take effect in March.

FOMC Chairman Jerome Powell will almost certainly be questioned about the schedule of the financial statement reduction, the probability of a 50 basis point rate rise in March, and the number of rate hikes that may occur before the end of the calendar year.

In addition, market investors will be paying particular attention to Powell’s statements on the prospects for inflation.

The Dow Jones Industrial Average is up 0.8% in the early European hours, and the S&P 500 is up 2.1%, indicating a bullish shift in market sentiment. Benchmark 10-year US Treasury note yield has fluctuated between 1.7% and 1.8% over the past few weeks.

Major Currency Exchanges And Crypto

On Tuesday, the Euro-Dollar exchange rate plummeted to its lowest level in a month at around 1.1260 before rebounding to about 1.1300. As of early Wednesday morning, the pair drifted sideways around that level.

On Tuesday, the Pound/Dollar clawed back a tiny amount of its weekly losses and was trading quite calmly around 1.3500 on Wednesday.

Gold reached $1,854 on Tuesday, the highest level in more than two months. The risk-averse market climate continues to aid the yellow metal in finding demand, but the broad-based gain of the Dollar may restrict the upward potential of the XAU/USD pair for the time being.

As markets wait for the Bank of Canada’s interest rate announcement, the USD/CAD has retreated below the 1.2600 region. 

Despite expectations that the Bank of Canada would maintain the policy rate constant at 0.25%, January’s high inflation readings might pave the way for a more hawkish monetary policy.

The USD/JPY fluctuates in a narrow band around 114.00 in the middle of the week. According to data released on Wednesday, the leading economic indicator in Japan climbed to 103.2 in November from 101.5 in October. However, this improvement was largely overlooked by market players.

Following Monday’s steep dip, Bitcoin fails to find a direction and is currently trading at roughly $37,000 per Bitcoin. 

With the price of Ethereum hovering around $2,500, the cryptocurrency is waiting for the next trigger to strike.