Forex Today: Markets remain calm to start 2024 as focus shifts to key data releases

Here is what you need to know on Tuesday, January 2:

Following some choppy action in the last trading days of 2023, financial markets seem to have turned relatively calm to begin the new year. S&P Global will release revisions to December PMI data for Germany, the Euro area, the UK and the US later in the day. ISM Manufacturing PMI, November JOLTS Job Openings data and FOMC Minutes from the US could ramp up volatility in the second half of the day on Wednesday.

The US Dollar (USD) Index, which tracks the USD's performance against a basket of six major currencies, lost 2%  on a monthly basis in December as dovish Federal Reserve (Fed) bets dominated the action. In that same period, the benchmark 10-year US Treasury bond yield fell 10%. Early Tuesday, the USD Index holds steady at around 101.50 and the 10-year yield stays below 3.9%. 

During the Asian trading hours, the data from China revealed that the Caixin Manufacturing PMI improved modestly to 50.8 in December from 50.7. This reading came in better than the market expectation of 50.4. US stock index futures trade mixed in the European morning.

After touching a multi-month high of 1.1140 in the last week of 2023, EUR/USD staged a correction and declined toward 1.1000 heading into the New Year. Early Tuesday, the pair trades marginally lower on the day slightly below 1.1050.

GBP/USD lost its traction and dropped below 1.2750 following a failed attempt to break above 1.2800 in the previous week. The pair fluctuates in a narrow channel above 1.2700 in the European session on Tuesday.

USD/JPY fell nearly 5% in December and touched its lowest level since July below 140.50 ahead of the New Year holiday. The pair gathered recovery momentum early Tuesday and was last seen rising 0.5% on the day near 141.50.

Gold went into a consolidation phase and moved sideways at around $2,060 in the second half of the previous week. XAU/USD started to edge higher to begin 2024 and was last seen trading in positive territory above $2,070.