What to watch for on Wednesday, July 13:
Risk aversion amid slowing economic growth and rising inflation continued to be the main theme in financial markets. The US currency appreciated during the first half of the day, hitting new 20-year highs against the Euro as the pair hit 0.9999.
The greenback lost steam ahead of the Wall Street open, giving back some of its latest gains to end the day slightly lower against most major rivals. The improved market sentiment was due to a White House memo, which noted that US macroeconomic data, including the June jobs report, are not consistent with a recession. The document added that “the strength of the labor market puts the US in a better position than many other countries to transition to lower inflation and stable growth.”
US indices rebounded on the news but turned red before the close as investors await Wednesday’s expected US inflation figures.
The GBP/USD pair bottomed out at 1.1806, later settling just below the 1.1900 threshold. The UK Conservative 1922 Committee announced eight candidates for the Tory leadership contest. Meanwhile, Bank of England Governor Andrew Bailey said alternatives to a 25 basis point rate hike are on the table, adding that he expects inflation to fall sharply next year.
Commodity-linked currencies managed to recover ground, but trimmed some of their gains before the close, following the Wall Street slide. The AUD/USD pair is trading around 0.6750, while the USD/CAD is hovering around the 1.3020 zone.
Haven currencies appreciate against the dollar, with USD/CHF trading at 0.9810 and USD/JPY at 136.80.
Gold is nearing a new 2022 low of $1,723.15 a troy ounce and looks poised to extend its slide. Oil prices fell steadily, with WTI now trading at $95.50 a barrel.
Attention now turns to inflation as Germany and the United States are to release updates to their respective consumer price indices. German annual inflation is expected to confirm at 7.6% in June, while US inflation is forecast to rise to 8.8%, a new multi-decade high.
Source: Fx Street
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