This is what you need to know to trade today Thursday April 7:
The dollar rally continued late on Wednesday and the US dollar index DXYwhich measures the performance of the dollar against a basket of six major currencies, reached its highest level in almost two years at 99.77. Ahead of the initial jobless claims data and various speeches from FOMC policymakers, the DXY index is making a downward correction. Market sentiment remains optimistic early Thursday with US stock index futures posting modest gains. The European economic calendar will show the European Central Bank (ECB) meeting minutes and retail sales data for February.
Minutes from the Federal Reserve’s March monetary policy meeting revealed on Wednesday that many participants noted that they would have preferred a 50 basis point increase in the target range for the fed funds rate at that meeting. The publication also confirmed that the Fed plans to start reducing the balance sheet after the May meeting. As the market’s initial reaction to the FOMC statement, the 10-year US Treasury yield rose to its highest level since April 2019 at 2.66% before retreating below 2.6% early Thursday.
In the meantime, the UK announced that it will freeze the assets of Sberbank and ban Russian imports of coal. In addition, both the United States and the United Kingdom said they will ban foreign investment in Russia.
The EUR/USD fell to its lowest level in a month at 1.0874 and closed for the fifth consecutive day in negative territory on Wednesday. The pair is now posting small recovery gains near 1.0900.
The GBP/USD fell below 1.3050 on Wednesday, but managed to recover a small portion of its weekly losses early on Thursday. At time of writing, the pair is up almost 0.3% on the day at 1.3100.
Despite rising US bond yields, the USD/JPY had a hard time gaining traction. The pair continues to trade in a relatively tight channel below 124.00 in European morning. Commenting on currency valuations, “the merits of a weak yen in the Japanese economy outweigh the demerits,” Asahi Noguchi, a member of the Bank of Japan’s monetary policy council, said on Thursday.
The gold remained relatively resilient amid risk aversion on Wednesday and ended up closing the day largely unchanged above $1,920. At time of writing, XAU/USD is trading sideways below $1,930.
Bitcoin suffered heavy losses on the aggressive tone from the Fed and lost more than 5% on Wednesday. BTC/USD is fluctuating below $44,000 at the start of the European session on Thursday. The ethereum It has already dropped almost 10% this week, but remains above $3,000.
Source: Fx Street
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