USD continues lower; stocks consolidate after yesterday's rout

Earlier in the day, the Chinese trade balance improved notably in dollar terms, rising to 94.46 billion USD in December, p from 71.71 billion USD previously. Imports nearly halved to 19.5% from 31.7%, while exports decreased marginally to 20.9% from 22% in November. Commodities and commodity-linked currencies ticked higher after the data.

Later today, US retail sales for December are due, likely showing a slight decline, despite the holiday season. In addition, import/export price indices will also be released, along with the Michigan consumer sentiment index for January.

Additionally, ECB President Christine Lagarde is due to speak at the Conference of Parliamentary Committees for Union Affairs via satellite. Her speech might not influence the markets unless she says something brand new.

On Thursday, Federal Reserve Governor Lael Brainard became the latest US central banker, stating that interest rates will rise to combat soaring inflation.

US stocks experienced sharp losses yesterday as the Fed appears ready to raise rates four times this year. At the same time, the reduction of its balance sheet will likely begin sooner than previously anticipated. 

On the other hand, the USD has failed to capitalize from the recent hawkish sentiment and dropped hard, pushing the EURUSD pair toward the 1.15 level. At the same time, the USDJPY pair is testing essential support near 113.80, while GBPUSD rose to six-week highs and is testing the 200-day moving average at 1.3740.

Elsewhere, oil does not care about anything and continues the winning streak toward the cycle highs near 85 USD, trading slightly below 83 USD during today's London session.