ForexLive European FX news wrap: Dollar jumps higher alongside yields

<p>Headlines:</p><ul><li><a href="https://www.forexlive.com/news/dollar-extends-gains-in-european-morning-trade-20240116/">Dollar extends gains in European morning trade</a></li><li><a href="https://www.forexlive.com/news/the-antipodean-currencies-fall-to-fresh-five-week-lows-against-the-dollar-20240116/">The antipodean currencies fall to fresh five-week lows against the dollar</a></li><li><a href="https://www.forexlive.com/centralbank/ecbs-villeroy-says-next-move-will-be-a-rate-cut-some-time-this-year-20240116/">ECB's Villeroy says next move will be a rate cut some time this year</a></li><li><a href="https://www.forexlive.com/centralbank/ecbs-villeroy-too-early-to-declare-victory-over-inflation-20240116/">ECB's Villeroy: Too early to declare victory over inflation</a></li><li><a href="https://www.forexlive.com/centralbank/ecbs-centeno-need-to-be-prepared-for-all-topics-including-rate-cuts-20240116/">ECB's Centeno: Need to be prepared for all topics, including rate cuts</a></li><li><a href="https://www.forexlive.com/centralbank/ecbs-valimaki-says-must-not-jump-the-gun-on-rate-cuts-20240116/">ECB's Valimaki says must not jump the gun on rate cuts</a></li><li><a href="https://www.forexlive.com/news/germany-january-zew-survey-economic-sentiment-152-vs-120-expected-20240116/">Germany January ZEW survey economic sentiment 15.2 vs 12.0 expected</a></li><li><a href="https://www.forexlive.com/news/uk-november-ilo-unemployment-rate-42-vs-42-expected-20240116/">UK December payrolls change -24k vs -13k prior</a></li><li><a href="https://www.forexlive.com/news/germany-december-final-cpi-37-vs-37-yy-prelim-20240116/">Germany December final CPI +3.7% vs +3.7% y/y prelim</a></li><li><a href="https://www.forexlive.com/news/italy-final-december-cpi-06-vs-06-yy-prelim-20240116/">Italy final December CPI +0.6% vs +0.6% y/y prelim</a></li><li><a href="https://www.forexlive.com/news/trump-asserts-dominance-in-first-republican-presidential-contest-in-iowa-20240116/">Trump asserts dominance in first Republican presidential contest in Iowa</a></li><li><a href="https://www.forexlive.com/news/magnitude-48-earthquake-reported-in-ishikawa-prefecture-in-japan-20240116/">Magnitude 4.8 earthquake reported in Ishikawa prefecture in Japan</a></li></ul><p>Markets:</p><ul><li>USD leads, AUD lags on the day</li><li>European equities lower; S&amp;P 500 futures down 0.4%</li><li>US 10-year yields up 6.2 bps to 4.012%</li><li>Gold down 0.8% to $2,038.94</li><li>WTI crude up 0.5% to $73.07</li><li>Bitcoin up 0.8% to $43,042</li></ul><p>It was one-way traffic in European trading today as the dollar surged higher against the rest of the major currencies bloc.</p><p>The return of the Treasuries market from the long weekend sees yields jump higher and that is helping to underpin the greenback today. Adding to that is the continued pushback by ECB policymakers on any imminent rate cuts, although that remains more of a he says, she says situation with traders still fully pricing in a rate cut for April.</p><p>The dollar's strength also comes amid a couple of key technical moves on the session. EUR/USD is down 0.5% in a break below 1.0900 to 1.0875 while USD/JPY is racing to fresh one-month highs to 146.75, pushing past last week's high of 146.41 on the day.</p><p>Adding to that, USD/CAD is contesting a push above its 200-day moving average of 1.3480 while AUD/USD is down 0.9% to 0.6600 and nearing a test of its own 200-day moving average at 0.6581. Meanwhile, NZD/USD is down 0.8% to 0.6150 as it tracks to fresh five-week lows amid a crack under the 0.6200 mark.</p><p>The dollar advance also comes amid a slump in equities with European indices set for back-to-back losses to start the new week. US futures are also pointing lower and that is not helping with the risk mood on the day.</p><p>In other markets, gold is down 0.8% to $2,039 and brushing up against a test of key near-term levels as outlined <a href="https://www.forexlive.com/news/golds-latest-bounce-runs-into-trouble-in-fall-to-key-near-term-technical-levels-20240116/" target="_blank" rel="follow">here</a>. Oil is up slightly to $73 as the push and pull this week continues with traders still assessing the situation in the Middle East.</p><p>While the moves so far today appear to be in one direction, will we see a repeat of the strong bids in the front-end of the bond market as we did at the end of last week? That could yet come up to mess with the flows we're seeing to start the day.</p>

This article was written by Justin Low at www.forexlive.com.