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Forex Today: Dollar Loses Ground Ahead of Fed Silence

This is what you need to know to trade today friday september 9:

The dollar has come under renewed selling pressure during the Asian session on Friday and the DXY dollar index has fallen below 109.00. In the absence of any high-level macroeconomic data releases before the weekend, market participants will closely monitor comments from central bankers. The President of the European Central Bank (ECB), Christine Lagarde, will speak at 09:30 GMT. Before the Fed enters the silent period, Chicago Fed President Charles Evans, Fed Governor Christopher Waller and Kansas City Fed President Esther George will deliver speeches.

The positive risk environment of the markets seems to weigh on the dollar in the last day of the week. The Shanghai Composite Index is up almost 1% towards the end of the week and US stock index futures are up 0.3-0.5%. Meanwhile, the 10-year US Treasury bond yield remains relatively quiet at around 3.3%. Earlier, data from China showed that the consumer price index CPI reached -0.1% in August.

On Thursday, the chairman of the FOMC, Jerome Powell reiterated his commitment to do what is necessary to fight inflation: “History warns against a premature easing of monetary policy,” Powell noted, and the probability of a 75 basis point rate hike in September, according to CME Group’s FedWatch tool, rose above 80%. On a more neutral note, Chicago Fed President Charles Evans was open to a hike of 50 or 75 basis points at the next policy meeting.

After the sale that took place during the press conference of the president of the ECB, Christine Lagarde, the EUR/USD reversed its direction and rose towards 1.0100. As expected, The ECB announced on Thursday an interest rate hike of 75 basis points. Commenting on the prospects for monetary policy, Lagarde said that she did not know what the terminal rate was and explained that they will take the necessary tightening measures to reach the medium-term inflation target of 2%: “We believe that it will take several meetings to reach to that point,” Lagarde explained, adding, “Some may ask, how many is several? Well, probably more than two including this one, but probably also less than five“.

The GBP/USD ended Thursday’s volatility with small losses at 1.1500 before gaining momentum early on Friday. The pair is now up more than 0.8% on the day at 1.1595. British Prime Minister, Liz Truss announced on Thursday that the government will introduce an “energy price guarantee” for two years and explained that a typical household will pay no more than £2,500 a year in energy bills.

The USD/CAD closed Thursday for the second day in a row in negative territory and extended its decline towards 1.3000 early on Friday. Statistics Canada will report the August employment report later in the session. The investors they expect the unemployment rate to rise to 5% from 4.9% and that the net change in employment reaches +15,000.

After posting impressive gains in the first half of the week, the USD/JPY posted small losses on Thursday, but turned down on Friday. Japanese Finance Minister Shunichi Suzuki repeated on Friday that they are closely watching movements in the currency markets and noted that they will not rule out any option. At time of writing, the USD/JPY pair is down over 100 pips on the day, trading at 142.75.

The Prayed It fluctuated a lot in both directions on Thursday, but closed the day in the negative. With US bond yields struggling to rise further, XAU/USD is gaining traction and is now posting strong daily gains above $1,720.

The Bitcoin recovered $20,000 during the Asian session on Friday and extended its rally beyond $20,500 in the European session. The ethereum gains momentum early on Friday and breaks above $1,700 for the first time in two weeks.

Source: Fx Street

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