This is what you need to know to trade today Wednesday July 6:
The The US dollar index DXY rose on Tuesday to its highest level in almost two decades and ended up gaining more than 1% on the day buoyed by safe-haven money flows. The 2-10 year US Treasury yield curve has inverted, suggesting that markets are positioning for a recession. The dollar remains in a consolidation phase early on Wednesday as investors await data from the United States ISM Services PMI. Later, the Federal Reserve will also publish the minutes of the June monetary policy meeting. During the European session, the European Commission will release economic growth forecasts and Eurostat will release retail sales figures for May.
After Tuesday’s volatility, markets remain risk aversion midweek, with US stock index futures shedding 0.3%-0.4% on the day. News that Chinese authorities are conducting another round of mass testing in Shanghai and Xi’s city entering a seven-day period of “temporary control measures” appear to weigh on sentiment as well.
In the meantime, Crude oil prices suffered heavy losses as demand outlook worsened. The West Texas Intermediate Barrel WTI lost almost 10% on Tuesday and sank below $100 for the first time since early May. Late on Tuesday, the Secretary General of the Organization of the Petroleum Exporting Countries, Muhammad Barkindo, passed away at the age of 63.
The EUR/USD lost almost 150 pips on Tuesday and touched its lowest level since December 2002, at 1.0235. On Wednesday, the pair appears to have entered a consolidation phase above 1.0250.
The GBP/USD posts modest daily gains in European morning but still trading below 1.2000. The deputy governor of the Bank of England, Jon Cunliffe assured that they will not let high inflation embed, but added that they were seeing signs that the British economy was already slowing. Meanwhile, the British finance minister, Rishi Sunakand the Secretary of Health, Sajid Javid, tendered their resignation late on Tuesdayarguing that Prime Minister Boris Johnson has lost his ability to run the government properly and competently.
Falling oil prices weighed on the commodity-sensitive CAD on Tuesday and the USD/CAD broke above the 1.3000 level.
The USD/JPY remains trading in a relatively tight range above 135.00 as yen manages to hold onto safe haven.
The Prayed It broke below $1,800 and extended its decline to a fresh 2022 low near $1,763. XAU/USD posts small recovery gains and trades near $1,770 on Wednesday.
To the Bitcoin It struggles to find a direction and trades in a tight range slightly above $20,000. The ethereum remains above $1,100 after closing flat on Tuesday
Source: Fx Street
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