Equities Erase Yesterday's Gains; Dollar Slips Again

Meanwhile, there are some tiny signals of improvement for the global economy, with Shanghai's lockdown set to be lifted shortly and US President Joe Biden's comments earlier this week about a possible easing of the trade war with China boosting risk sentiment on Monday at the expense of the dollar.

Biden also urged OPEC to increase oil output in the hopes of reducing inflationary pressures. Nevertheless, the WTI benchmark remained near 110 USD. 

Mood deteriorates again

However, the optimistic sentiment failed to last for two days as global equities sank Tuesday. The Nasdaq 100 tech index was down 2% during the London session, while Dow and SP500 lost 1%. EU bourses opened 1% lower. 

Political and corporate leaders gathered in Davos for the World Economic Forum warned that the global economic picture has "darkened." Investors are now waiting for global manufacturing PMIs, released throughout the day.

Apart from that data, US new home sales for April are due, expected to post another decline, mainly due to rising mortgage rates. At the same time, the Richmond Fed manufacturing index is on schedule. 

Last but not least, Federal Reserve Chair Jerome Powell will deliver pre-recorded opening remarks at the National Center for American Indian Enterprise Development Reservation Economic Summit in Las Vegas;

The greenback dropped notably over the last couple of days as it has been heavily overbought, pushing the EURUSD pair to one-month highs above the 1.07 level. At the same time, precious metals, such as gold or silver, managed to book solid gains. Nevertheless, the medium-term outlook still looks bullish for the USD and bearish for metals.