What to watch for on Friday, June 10:
The US dollar soared on Thursday as fears gripped financial markets. The catalyst was the European Central Bank, as Lagarde and company reaffirmed their commitment to raise rates in July, although they anticipated a move of 25 basis points. Investors had expected a 50 basis point rise amid inflationary pressures. He added that more hikes are likely in the near future, although the magnitude of each increase will depend on the medium-term inflation outlook.
In addition, the central bank revised upwards annual inflation forecasts, which now stand at 6.8% for this year, to later drop to 3.5% in 2023 and 2.1% in 2024. On the other hand, growth has slowed to 2.8% in 2022 and 2.1% in the following two years.
The EUR/USD pair has tumbled and is now trading near the 1.0600 zone.
The GBP/USD pair fell below 1.2500, affected by risk aversion, although the pound was also hurt by comments from UK Prime Minister Boris Johnson, who said that the kingdom is in a better position than in the past, when the nation faced economic difficulties, although he added that there is no quick solution to the situation in Ukraine, one of the reasons for the increasing price pressures.
The Bank of Canada published a banking stress test, revealing that major banks would suffer huge financial losses, but would remain resilient in the event of a large and lasting economic shock. The document also showed that monetary policy tightening would test the resilience of the financial system and could exacerbate current financial vulnerabilities. The USD/CAD pair is trading at 1.2700 after an intraday low of 1.2517. Lower oil prices weighed on the CAD as black gold traded at $121.10 a barrel.
AUD/USD fell on Wall Street selling and ended the day just below 0.7100. Gold weakened into a range, now trading around $1,847 a troy ounce.
USD/CHF and USD/JPY rose amid dollar strength and rising US government bond yields. The 10-year Treasury yield yielded 3,073%, a multi-week high.
US indices closed in the red, with the Nasdaq Composite the worst performer, down 2.50%.
Attention will turn to US inflation on Friday, as the country is to release the consumer price index for May, which is expected to be stable at 8.3% yoy. However, the White House warned on Wednesday that the government expects inflation figures to be “elevated.”
Source: Fx Street
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