In the lead-up to the market opening, stock futures showed a slight upward trend, propelling the S&P500 to its highest point in 23 months on Monday. Short sellers have faced challenges in this tumultuous period, as an unexpected surge in U.S. shares last week prompted hedge funds to urgently offset their bearish short positions against U.S.-listed companies, as reported by UBS on Tuesday.
The performance of the dollar exhibited a mixed picture, notably strengthening against the yen while losing ground against the euro and sterling.
Previous concerns about potential shipping threats in the Red Sea seemed to fade quickly. Despite a retreat in crude oil prices from Monday's peaks, they continue to hover near 5% year-on-year declines.
Gold prices remained subdued on Tuesday, as a slight uptick in the dollar countered support from falling Treasury yields. Investors are keenly awaiting U.S. economic data scheduled for release later this week.
Asia Pacific
In the Asia Pacific region, the Bank of Japan opted to postpone any further tightening of its ultra-loose monetary policy until the next year, making it the final G4 central bank to conclude its activities for the year. The bank maintained its main policy rate in negative territory on Tuesday, awaiting additional evidence on wage growth and prices before considering a shift away from ongoing monetary stimulus.
The Greenback rose against the japanese yen, closely to the 145-146.5 zone, which can occur as a resistance.
The AUD/USD pair is hovering around the upper end of the recent days range.
Europe
In Europe, the European Central Bank imposed an additional capital requirement on six banks displaying excessive leverage or potentially presenting an overly optimistic financial position, as announced by ECB bank supervisor Andrea Enria on Tuesday. While markets wind down ahead of the Christmas holidays, international gatherings of senior officials persist.
The Euro is little changed while the Sterling is higher, moving towards the resistance zone located within the $1.2750-1.2790 range.
America
And even though some Federal Reserve and European central banks officials have tried to push back against what they saw as excessive easing speculation in recent days, San Francisco Fed boss Mary Daly underlined the direction of travel at least. Daly told the Wall Street Journal Fed rate cuts are likely be appropriate next year because of an improvement in inflation and there was a risk of the policy stance being too tight.
Housing starts top the U.S. data diary later, with Fed speakers in the mix too and FedEx results due as well.
Canada's markets will eyeball the latest inflation numbers there. The Canadian dollar is about to test the local high against the Greenback, which located around the 1.3350 mark.