Forex Today: Choppy action continues ahead of mid-tier US data

Here is what you need to know on Thursday, December 8:

Financial markets remain choppy in the second half of the week amid a lack of fundamental drivers and high-tier data releases. Participants stay on the sidelines ahead of next week's key central bank announcements and major currency pairs struggle to make a decisive move in either direction. Following Wednesday's pullback on falling US Treasury bond yields, the US Dollar Index stays calm near 105.00. The US economic docket will feature the weekly Initial Jobless Claims on Thursday and investors will keep a close eye on mews surrounding China's zero-Covid policy.

Shanghai city authorities announced earlier in the day that they will not be requiring Covid test checks for restaurants and entertainment venues from Friday. Meanwhile, Hong Kong said that they will ease isolation rules for infected travellers. Hong Kong's Hang Seng Index looks to close more than 3% higher but Shanghai Composite Index trades flat following these developments. 

Meanwhile, the data from the US revealed on Wednesday that Unit Labor Costs rose by 2.4% in the third quarter. With this print missing the market expectation of 3.2% by a wide margin, the benchmark 10-year US Treasury bond yield turned south and dropped below 3.5%, weighing on the US Dollar. 

Following the December policy meeting, the Bank of Canada decided to raise its policy rate by 50 basis points to 4.25% as expected. Regarding future policy action, the BoC noted in its policy statement that it will be considering whether the interest rate needs to rise further. "Inflation is still too high and short-term inflation expectations remain elevated," the BOC further noted. After having closed flat at 1.3650 on Wednesday, USD/CAD continues to fluctuate near that level early Thursday. 

EUR/USD snapped a two-day losing streak and closed slightly above 1.0500 on Wednesday. The pair trades in a narrow channel in the European morning. European Central Bank (ECB) President Christine Lagarde is scheduled to deliver a speech at 1200 GMT.

GBP/USD managed to register modest daily gains on Thursday and went into a consolidation phase at around 1.2200 on Thursday.

Earlier in the day, the data from Japan revealed that the Gross Domestic Product shrank at an annual rate of 0.8% in the third quarter. This reading came in slightly better than the market expectation for a contraction of 1.1%. USD/JPY showed no immediate reaction to this data and was last seen fluctuating below 137.00.

Gold Price benefited from falling US T-bond yields and posted strong daily gains on Wednesday. XAU/USD was last seen consolidating its gains above $1,780.

Bitcoin continues to move up and down in a narrow channel at around $17,000 on Thursday. Following Wednesday's 3% decline, Ethereum stays quiet slightly above $1,200.

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