Dollar ticks lower, awaits FOMC minutes

The US Manufacturing PMI failed to meet estimates yesterday and declined more than expected in December, printing 58.7, down from 61.1 in November. Analysts had expected 60.0. Additionally, the prices paid subindex decelerated sharply to 68.2, from 82.4 previously, suggesting inflation pressures in the manufacturing sector might be finally easing. 

Later today, the ADP employment report for December is due, and investors expect a decline in new jobs to 400,000, from 534,000 scored in November. 

Moreover, the FOMC minutes from the December Fed's meeting will be released, likely confirming the central bank's hawkish stance. As a result, volatility in the financial markets could be elevated after the Minutes. 

The greenback has remained calm so far today, with the EURUSD pair trading near 1.13. At the same time, the USDJPY pair returned below 116 after reaching the highest level in five years yesterday.

Elsewhere, it looks like rising US yields could pose a problem for the highly leveraged tech sector, the source of most of the gains on Wall Street over the last few years. The Nasdaq 100 index declined sharply yesterday as the two-year yield jumped above 0.8% for the first time since March 2020.

Oil ticked higher Tuesday, following the OPEC+ decision to stick to its plan of increasing output by 400,000 barrels per day in February, suggesting confidence that overall demand wouldn't be hit too badly by the fresh Covid outbreak.