Forex Today – Asian Session: Fears remain the same

What to watch for on Tuesday, July 5:

It was a dull start to the week as US markets were closed for the 4th of July holiday. The dollar gained some strength late in the day, but action was limited as traders stayed away from their desks.

Asian stocks posted modest gains, but European indices barely stayed in the green, reflecting lingering concerns about growth and inflation. Wall Street futures were modestly lower.

The GBP/USD pair is trading around 1.2100 as Brexit-related issues undermined demand for the pound. The Labor party is ready to fight Prime Minister Boris Johnson for his Brexit legacy in the upcoming election. The deal created turmoil in the UK compounding price pressures amid the disruption to trade. Entire industries in Germany could collapse due to natural gas supply cuts from Moscow, according to Yasmin Fahimi, the country’s top union official.

The EUR/USD pair is trading around 1.0420, not far off its Friday close. Dismal European data undermined demand for the shared currency, as May’s Producer Price Index rose 36.3% year-on-year. The energy crisis also hurt the euro amid the Russian invasion of Ukraine.

Commodity-linked currencies advanced against the dollar. USD/CAD is trading around 1.2860, while AUD/USD is trading at 0.6860. The Reserve Bank of Australia will announce its monetary policy decision early on Tuesday and is sure to reignite volatility after a quiet Monday.

In the United States, attention remains on the Biden administration as officials are discussing whether or not to remove Chinese tariffs imposed by former President Donald Trump. This week a decision could come out.

The dollar advanced against its safe-haven rivals, with USD/CHF now trading at 0.9610 and USD/JPY at 135.70.

The price of gold saw limited activity, now changing hands around $1,807 a troy ounce. Oil, meanwhile, rises, and WTI is trading at $110.45 a barrel.