Forex Today – Asian Session: US Dollar Spikes to 105 on Risk Aversion Flows

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Here’s what you need to know for today, Thursday, June 30:

The forex space was buoyed by comments from Federal Reserve Chairman Jerome Powell. He explained that there is a risk that interest rate hikes by the US central bank will slow down the economy too much. However, he added that the biggest risk is the persistence of inflation. Powell made the comments at a European Central Bank conference.

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Investors remain concerned that an aggressive push by the Fed to rein in inflation will drag the economy into recession, and that has returned the safe haven dollar, sinking all other ships. Inflation fears are fueled by oil prices, which have extended their rise for the fourth day in a row.

The Dollar Index (DXY), which measures the USD against six peers, rose to a high of 105,149 from a low of 104,356 as investors sought safety in US assets while global stocks fell on rising risk. recession Nonetheless, the US dollar index remained below a two-decade high of 105.79 hit two weeks ago.

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The euro fell to 1.0435 from a high of 1.0535, and EU consumer confidence continued to fall below break-even in June. Markets are watching EU unemployment on Thursday and inflation on Friday. These data will be key before the meeting of the monetary policy committee of the European Central Bank on July 21, in which the central bank is expected to begin its tightening cycle.

The GBP/USD pair also fell, hitting a low of 1.2105 ahead of UK Gross Domestic Product data to be released on Thursday. Noise from the Northern Ireland protocol, coupled with sentiment surrounding the Bank of England, are critical elements in the short-term outlook for sterling. The Bank of England is expected to maintain its tightening cycle to curb inflation after a 25 basis point hike at the last meeting. However, it will not necessarily have to act “forcefully” to rein in inflation, according to Governor Andrew Bailey, who spoke on Wednesday, adding that there were signs an economic slowdown was underway in Britain.

USD/CAD reached a high of 1.2900 ahead of Canada’s GDP to be released on Thursday. Traders will be watching the Bank of Canada’s interest rate decision on July 13, where further monetary policy tightening is expected following June’s 50 basis point hike.

USD/JPY had an up and down day, trading between 135.76 and 137.00, and ended the day in a consolidation phase in a key area on the hourly chart, around 136.60.

Gold for August delivery closed down $3.70 to $1,817.50 per ounce, with spot remaining in a tight range between $1,812 and $1,833, while US bond yields fell , which helped boost the precious metal, which is not in danger. The 10-year US Treasury bond yield fell to a low of 3,089%. Bitcoin was slightly stronger. Its price is now fluctuating tightly around the $20,000 level, a support that Bitcoin bulls expect to continue to hold. WTI was down 2.4% around the close on Wall Street, even after a report showed an unexpected drop in US inventories last week.

For today, both the official China Manufacturing Purchasing Managers’ Index (PMI) and Non-Manufacturing PMI are released.

Source: Fx Street

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