What to watch for on Thursday, June 23:
Fears continued to support the dollar, which ended the day with gains against most of its major rivals. Attention remained focused on the overheating of inflation and the possible recession of the main economies.
German Economy Minister Robert Habeck announced that the country would move to the second phase of its three-stage gas plan amid reduced Russian flows. Since the war in Ukraine began, fuel shortages have been Europe’s main concern. This specific phase does not imply a state intervention, planned for the next one.
EU S&P Global PMIs for June painted a gloomy picture, as EU economic activity hit its lowest level in 16 months, reflecting stagnant demand growth. The manufacturing PMI contracted to 52, while the services index slumped to 52.8 from 56.1 in May. Australian data beat expectations, while UK figures were mixed, though not too different from May. Lastly, the US manufacturing index slowed to 52.4 in June, the lowest level in almost two years, while the services PMI contracted to 51.6 from 53.4 in the previous month, the lowest level in five months. The reports fueled recession-related concerns.
FOMC Chairman Jerome Powell testified before the House Financial Services Committee on monetary policy and the state of the economy. The Fed Chairman said that a large part of inflation would not be affected by the central bank’s tools, although another part would. On a positive note, he added that this year’s growth should remain fairly strong, but his comments clearly reflect concerns about inflation and growth, as he repeated that it would be “very difficult” to ensure a soft landing.
Wall Street spent the day lower but managed to post modest gains on Thursday. US Treasury yields, meanwhile, fell amid security demand.
Major pairs held at known levels. The EUR/USD pair is trading around 1.0530, while the GBP/USD is trading around 1.2260. The AUD/USD pair is struggling around 0.6900, while the USD/CAD is approaching 1.3000. The Swiss franc and the yen, two haven currencies, made modest gains against the dollar.
Gold ended the day near its weekly low, now trading around $1,825 a troy ounce. Oil prices were stable, with WTI trading at $104.00 a barrel.
Source: Fx Street
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