It is all about the Fed and Powell so far

Stronger US fundamentals and the hawkish tone from Chief Powell over the weekend were more than enough to lift the Greenback to fresh yearly highs and put the risk-associated universe under heightened pressure at the beginning of a new trading week.

Here is what you need to know on Tuesday, February 5:

The greenback rose to new yearly highs well past the 104.00 barrier in response to investors’ assessments of the latest NFP figures and the hawkish tilt from Chief Powell, all amidst the marked pick-up in US yields. On February 6, the US docket includes the TIPP Economic Optimism Index and the speech by Cleveland Fed L. Mester.

EUR/USD remained well on the defensive and slipped back to the 1.0730 region to print new two-month lows against the backdrop of the intense upward bias in the US Dollar and the absence of surprises from the final Services PMI across the euro bloc. The release of Retail Sales in the broader Euroland will be in the limelight on Tuesday.

GBP/USD followed its risk-linked peers and retreated to multi-week lows well south of 1.2600 the figure amidst the generalized strong tone in the Greenback and a final UK Services PMI still below the 50 threshold. Across the Channel, the BRC Retail Sales Monitor and the Construction PMI are due on Tuesday.

The combination of the sharp advance in the Greenback and higher yields lent legs to USD/JPY and bolstered a move to a new 2024 top in the 148.80/85 band on Monday. Next on tap in Japan will be the December Household Spending figures due on February 6.

The continuation of the leg lower saw AUD/USD break below the 0.6500 support and print fresh three-month lows at the beginning of the week. All the attention will be on the RBA meeting on Tuesday, when the central bank is seen maintaining its cash rate intact at 4.35%.

USD/CAD surpassed the key 200-day SMA and climbed to multi-day highs above 1.3500, adding to Friday’s strong advance. On Tuesday, Building Permits and the Ivey PMI are due ahead of the speech by BoC’s T. Macklem.

WTI prices dropped for the fourth session in a row and approached the $71.00 mark per barrel, as dwindling bets for a rate cut by the Fed in March weighed on traders’ sentiment. Next on tap for the commodity will be the report on US crude oil inventories by the API and the EIA on Tuesday and Wednesday, respectively.

The stronger Dollar kept prices of both Gold and Silver under pressure, sparking a marked decline to the $2010 zone and the $22.20 area, respectively.