What to watch for on Tuesday, June 21:
The US dollar ends Monday with modest losses against most major rivals. However, the better tone of the European indices and a public holiday in the United States, led to choppy trading across the currency board.
The EUR/USD pair is currently struggling against the 1.0500 level amid disappointing local news. European Central Bank President Christine Lagarde testified before the European Parliament’s Economic and Monetary Affairs Committee, repeating that the central bank intends to raise the key interest rate by 25 basis points at its July policy meeting. In addition, she added that they will raise rates again in September because inflation is “undesirably high.”
The war in Ukraine has reduced gas flows from Russia to the Union, with major countries looking to revive coal-fired power plants as an alternative. The Kremlin has indicated that they are going to send gas to the EU, claiming that gas flows have decreased due to the lack of turbines in NordStream as a result of the sanctions. German Chancellor Olaf Scholz said that is not plausible.
Brexit woes continue to weigh on the pound after the British government announced plans to amend parts of the Northern Ireland Protocol, despite claims by the EU that it is in breach of international law. GBPUSD hovers around 1.2250.
Federal Reserve Chairman Jerome Powell will testify on the Semiannual Monetary Policy Report before the Senate on Wednesday and will repeat his testimony before another committee on Thursday. Market participants will be looking for clues about the evolution of the US economy.
Commodity-linked currencies managed to gain against the dollar, despite the sour tone in gold and oil. The shiny metal fell to as low as $1,835 a troy ounce, while WTI is trading around $108.80 a barrel. The USD/CAD pair falls to 1.2990.
AUD/USD is trading around 0.6950 ahead of the RBA meeting minutes. The document could shed some light on why policymakers raised interest rates by 50 basis points and whether they plan to continue raising rates by more than 25 basis points a month.
Source: Fx Street
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