XAU $XAU Initial ShortXAU $XAU Initial Short. TP and SL on chart. Move SL on TP. After TP2, trail with 0.5ATR step and 1.5ATR offset.
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The Dollar maintains its momentum ahead of the FedEUR/USD🔼
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As anxiety dominates financial markets ahead of the US Federal Reserve's decision, the US dollar maintained its strength on Tuesday and Wednesday's opening hours.
Market participants had long anticipated a 50 bps increase, but on Monday, market chatter suggested the central bank may opt for a 75 bps increase. In addition, US officials will give updated Economic Projections, which might result in a protracted aggressive attitude if the new scenario suggests stagflation.
Regarding Eurozone, ECB member Klaas Knot hinted at more rate rises in October and December while maintaining a 25 basis point increase in September.
The United Kingdom delivered mixed employment figures, as the unemployment rate increased from 3.7% in March to 3.8% in April. Still, the number of persons seeking unemployment benefits decreased by 19.7K in May.
The EUR/USD pair stays above 1.0400, while GBP/USD trades at 1.1980, its lowest level since March 2020. The AUD/USD pair continued its decline to 0.6850, while the USD/CAD pair trades at 1.2955, as the weak performance of stocks and falling gold and oil prices sapped demand for commodity-linked currencies.
Wall Street continued under selling pressure, although the Nasdaq Composite managed to notch a 0.10% gain.
Yields on US government bonds continued to rise, with the yield on the 10-year Treasury note reaching a 10-year high of 3.489%.
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Fed rate hike fears trigger US stock sell-off EUR/USD ⬇️
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Since inflation does not seem to have peaked just yet, investors expect a mega rate hike of 75 basis points from the Federal Reserve on Thursday, which could bring the US economy to a recession. As a result, major US indices like S&P 500, Dow Jones and Nasdaq 100 have all declined. Meanwhile, the U.S. 10-year Treasury yield kept breaking the record high since 2008, currently at 3.385%.
Major currencies remained bearish, the Euro and Aussie dropped to near month-low, EUR/USD closed at 1.0408 and AUD/USD at 0.6923. With its GDP data underperforming in all variations, GBP/USD went further to a near 3-month low at 1.2134.
Later today (14 June), the UK Office for National Statistics will provide labor market related data such as claimant count change and unemployment rate. Regarding the interest rate decision in the UK, forecasts have projected a 25 basis point increase from the Bank of England.
The USD/CAD pair rose and stabilized at 1.290 level, before closing at 1.2897 - a near month-high. A series of US retail sales data will be released tomorrow, the market anticipated an accelerated growth in core retail goods, and general sales to slow down due to soaring oil prices.
Crude oil mostly traded flat yesterday to a closing price of 120.93, but today saw a rebound from below 118 to over 121 a barrel. Gold futures were at 1,831.8, edging towards a near month-low of 1,820.
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UK to announce GDP figures todayEUR/USD ⬇️
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Major currencies retreated over the weekend, alternating between sharp falls and trading flat. EUR/USD slowed at 1.0520, closed at 1.0515 and currently trading at 1.0482. Tomorrow (14 June), the Germany Harmonized Index of Consumer Prices will provide insight into European inflation.
The British Pound followed the Euro by dropping to a closing price of 1.2314, now at 1.2271. Later today in the afternoon, the UK Office for National Statistics will provide a series of GDP and Manufacturing Production figures, with employment data to follow afterwards.
Meanwhile in the US, the Producer Price Index (PPI) announcement on Tuesday is expected to increase from 0.5% to 0.8%, a further divergence to the core PPI forecast, indicating soaring energy prices to be the primary source of inflation. USD/CAD closed at 1.2781, and kept climbing to 1.2814.
With new cases in Beijing faltering hopes of reopening, the Aussie was weakened against the US dollar, the AUD/USD pair declined to close at 0.7051, and just went further down to 0.7006. Gold futures were at
1,875.5 last week, the rally ended after meeting resistance at 1,880 level, eventually returning to 1,864.
Crude oil experienced wild fluctuations from a closing price of 120.67, now bouncing between 116 and 119 a barrel. United States 10-Year Bond Yield ascended to 3.200%, a high since 2008.
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ECB raises key rate by 25 basis points in JulyEUR/USD ⬇️
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The European Central Bank (ECB) finally relents, and prepares to increase the key interest rate by 25 basis points in July, while other interest rate categories remain unchanged. In its statement, the ECB claims “conditions have been satisfied” for a rate hike and net asset purchases will cease as means to tighten the monetary policy.
In response to this update, EUR/USD dipped from 1.0760, stabilized at 1.0620 with a closing price of 1.0614. While the ECB decision is less aggressive than the Federal Reserve and Reserve Bank of Australia, the ECB is expected to raise the key interest rate again in September.
Greenback also rallied against other major currencies, GBP/USD dipped from 1.2552 to 1.249. New lockdown measures were imposed in Shanghai and Beijing to meet China’s zero-case policy target, both Australian currency and economy were dampened, AUD/USD declined to 0.7097, after trading flat at 0.7095.
USD/CAD climbed and plateaued at 1.270 level to close at 1.2696, as Canada’s Net Change in Employment is expected to have a 30,000 increase - a double over last month’s growth of 15,200. A strong dollar and higher US treasury yields have gold futures prices subdued, spot gold briefly fell to 1,842 per ounce but quickly recovered to 1,852.8.
The downsizing of several US refineries did not deter the oil bulls, crude oil went down to 121.51 a barrel, now on its way back to 120. Later tonight (10 June), forecasts have projected a 0.5% increase in US Core Consumer Price Index (CPI), and general CPI going even higher with oil prices soaring.
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ECB rate hike, Norwegian strike spikes oil pricesEUR/USD ⬆️
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Yesterday (8 June), Eurozone GDP recorded a modest increase in both yearly (5.4%) and quarterly terms (0.3%), beating market expectations. The good news has made the European Central Bank more likely to raise interest rates tomorrow (10 June), which sits at 0%. EUR/USD retreated from 1.0750, stabilized and closed at 1.0714.
The GBP/USD pair experienced minor fluctuations to close at 1.2539 with a loss, possibly soured by the 56.4 reading from the UK Construction PMI, unable to meet the forecast of 56.6. AUD/USD had a closing price at 0.7192, unable to be lifted by the recovering Chinese economy.
Meanwhile in Canada, the Purchasing Managers Index had improved from 66.3 to 72.0, and investors anticipated a notable 30,000 rise in employment, but the greenback proved to be stronger - USD/CAD rebounded from 1.2521 to 1.2557. The US dollar rally extended to the Japanese yen as well, USD/JPY sprung to a 20-year high at 134.24.
As gold futures briefly went past 1,860.0 to 1,856.5, crude oil climbed from 119 to 122 a barrel, to a near 3-month high of 122.11. Even though US Crude Oil Inventories defied a negative outlook and increased by 2.025 million barrels, news of China easing lockdowns and Norwegian oil workers planning for a strike this weekend have increased demand and tightened supply.
A collection of critical economic indicators will be released tomorrow, in the form of US consumer price index (CPI), most predicted an upswing in general CPI and core CPI going the other way, implying that surging oil prices are the primary driving factors for inflation.
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RBA hiked rates by 50 bps, Target's loss becomes US stocks' gainEUR/USD ⬇️
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Yesterday (7 June), the Reserve Bank of Australia (RBA) raised the interest rate by 50 basis points to 0.85%. The decision was made to control inflation, despite the RBA believing in the resilience of the Australian economy. After declining to 0.7161, AUD/USD closed with gains at 0.7227.
US retail chain Target has expected its quarterly profit to decrease, its stock prices fell subsequently. However, a follow-up statement by Target announcing a price cut on products led investors to believe the inflation had peaked. The news cheered other US stocks, and major currencies drove back the US dollar.
The UK Composite Price Manager Index (PMI) went down to 53.1, though outperforming the forecast of 51.8, and the British Pound recovered from a low of 1.2440 to close with gains at 1.2588. EUR/USD dipped to 1.0654, then rebounded to 1.0699.
Canada's PMI had a reading of 72.0, a considerable improvement from 66.3 last month, this also strengthened the loonie in the process, which dragged the USD/CAD pair to dip from a high of 1.2617 to stabilize at 1.2530 level. Gold futures traded flat and closed at 1,852.1, nullifying yesterday's loss from 1,840.
EIA Short-Term Energy Outlook had mentioned the US requested OPEC to increase oil production, but recent responses were not positive. Since the market foresaw US Crude Oil Inventories to be further reduced by 1.917 million barrels, oil prices fluctuated to a 13-week high closing price of $119.41, currently flirting with the $120 level.
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Johnson remains UK Prime Minister, Pound enjoyed a brief boostEUR/USD ⬇️
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The dust has settled in the British parliament, Boris Johnson survived the no-confidence vote to stay in office. Although Johnson kept his position, the general election results and recent events have indicated great resistance ahead of his remaining term.
The British Pound briefly spiked above 1.257 and closed at 1.253 with minor gains, now on the downward path at 1.250. A series of the UK Purchasing Managers' Index related data will be available today (7 June) and tomorrow (8 June), including detailed figures on the service and construction sector.
As the market awaits the interest rate decision from the European Central Bank on Thursday, GDP data for the Eurozone will be announced tomorrow, with forecasts expecting a 0.3% increase - same as the previous quarter. EUR/USD fell from a high of 1.0750 to 1.0694, to which the actual interest rate change will bring greater volatility to the currency pair.
On the other hand, investors foresee a 25 basis point rate hike for the Reserve Bank of Australia, to a total of 6.0%. With restrictions gradually lifting in various Chinese cities, the Australian economy should have a brighter prospect. Later today, the statement after the interest rate decision shall provide further insight from the Australian government. Meanwhile, AUD/USD declined to 0.7191, currently at 0.7161.
USD/CAD experienced a V-Shaped Recovery - closing at 1.2575 after recovering from a low of 1.2541. The loonie didn't receive support from crude oil prices which traded flat at 118.5 per barrel yesterday, now meeting resistance at $120.
The United States 10-Year Bond Yield returned to 3.0% and continued, almost reaching 3.05%. The news held gold prices back, gold futures were at 1,843.7 last night and kept falling.
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Fed expects boosts US dollar to recover lost groundEUR/USD ⬇️
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The 2022 Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) have world leaders in economy sharing their remarks to global economic trends and their responses. While both Federal Reserve (the Fed) Chairman Jerome Powell and European Central Bank (ECB) President Christine Lagarde agreed that current inflation in a global scale is primarily caused by supply shock, Powell has decided to be proactive - putting a half-point interest rate increase "on the table" during May and work on the demand side of inflation. On the other hand, Lagarde prefers to be “gradual and flexible” when it comes to combating inflation, and only in June - when more data support arrives and the next governing council commences will the ECB actually put rate hike “on the table”.
The consistent hawkish stance has allowed the US dollar to recover against major currencies, EUR/USD closed at 1.0836 after retreating from a high of 1.0936. As more PMI-related data for EU and Germany will be available later today (22 April), forecasts have pointed to a slowed growth on the European continent. Meanwhile in the UK, the Bank of England’s (BoE) Governor Andrew Bailey will give two speeches, one of them directly addressing inflation dynamics. As later today, the Purchasing Managers Index (PMI) and retail related-data in the UK are expected to indicate a slowed growth and decreasing consumption volume, the BoE Governor’s response will greatly influence the British Pound’s exchange rates. For now, GBP/USD has dropped to 1.3028.
A strong US dollar also pushed back the gains made by the Australian and Canadian currencies, without any major Australian economic data being released this week, AUD/USD went down with the current to 0.7371. The USD/CAD pair rose to 1.2578 as oil price is relatively stable, Statistics Canada will release its Retail Sales data today, where Core Retail Sales is predicted to be sluggish, with a meager forecast of a 0.1% increase.
Gold and oil prices went in different directions, due to a climbing United States 10-Year Bond Yield that closed at 2.917, gold price slipped to 1,948.2 after regaining momentum from a low of 1,938. As China’s major cities remain under the shadow of the health crisis, a cut in global oil demand and US rate hike rumors resulted in minor gains in crude oil price, which retreated from a high of 105.29 and closed at 103.79 .
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There are signs that inflation has peaked in the USToday's forex news:
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Yesterday (12 April), the US Bureau of Labor Statistics announced its Consumer Price Index (CPI) related data, which was a mixed bag of indicators. After excluding food and energy products, the month-on-month (MoM) and year-on-year (YoY) CPI were 0.3% and 6.5% respectively, which were lower than expectations. However, once food and energy products are factored in, the general CPI recorded a 8.5% increase, slightly higher than its forecast of 8.4%, indicating increase in energy prices has contributed a considerable portion of US inflation.
As a result, oil and energy prices are likely to dictate whether US inflation has reached its peak. Should oil prices continue to climb from banning Russian oil imports due the sanctions, the Organization of the Petroleum Exporting Countries (OPEC) has stated that its members are unlikely to fill the difference by increasing production. Since strategic oil reserves in the US and International Energy Agency (IEA) are limited, oil prices in the long term will depend on when, and whether the Russian invasion of Ukraine could reach a peaceful conclusion for oil and global supply chain to recover.
If inflation keeps on the rise, the US Federal Reserve may increase interest rates for the second time in the year by 50 bps. The US dollar continues to hold its ground against major currencies, EUR/USD slid to 1.0826, and GBP/USD closed at 1.2997 as the recent lackluster domestic figures failed to strengthen the British Pound against the US dollar. On the other hand, UK National Statistics will release a basket of production and consumption related data today (13 April). Current forecasts all point to an increase in price indices, i.e. inflation, with oil and energy prices playing a role here as well.
A strong US dollar led USD/CAD to rally and close at 1.2643, and the Bank of Canada will provide its latest monetary policy and interest rate decision today, with the market predicting a rate hike of 1.0%.
Meanwhile, the US 10-year Treasury yield was last down 6.1 basis points to 2.721%, its first decline in eight sessions. Gold prices gained ground and closed at 1,967, after reaching a high of 1,980. Whereas US stocks record falls between 0.14% and 0.23%, as the market anticipates the Fed will introduce monetary tightening policies to curb inflation.
In Shanghai, quarantine restrictions were easing, signaling a possible increase in oil consumption, and recovery in the global supply chain. Although facing western sanctions, Russia's 6% drop in March’s average oil output also pushed crude oil to a closing price of 100.99 per barrel. The rally in commodity prices allowed the Australian currency to close at 0.7459, with a near week high of 0.7488.
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Today's forex news: Major currencies failed to maintain recovery
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Despite a brief rally, major currencies like the Euro and British Pound returned their gains against the US dollar. EUR/USD reached a daily high at 1.0933, before slumping to 1.0883. As the first round of French Presidential concluded with a minor lead for the current French leader March, further volatility was introduced to the Euro as reports claimed Russia will commence a new offensive on Donbas region, the allegedly pro-Russian Ukraine eastern territory.
GBP/USD bounced back from 1.2992, retaining minor oscillation at 1.3030 level, and closed at 1.3029. This is partly contributed by a mixed bag of domestic UK yields, month-on-month GDP only had a minor increase of 0.1%, falling short of the 0.3% increase forecast. However the year-on-year production figures outperformed the forecasts. Insights on the UK labor market shall be revealed later today, as the UK National Statistics will release the latest claimant count change and three-month ILO unemployment rate.
AUD/USD recorded a daily high at 0.7462, and slided to 0.7420 level, and the closing price was 0.7419. The surge in commodity prices was not enough to counteract the disruption in the global supply chain, caused by the continued Russian invasion of Ukraine, and the latest health crisis in China.
Major announcements will be made by the Bank of Canada tomorrow (13 April) regarding its interest rate decision and monetary policy. The central bank is expected to increase interest rate by 50bps, to follow the US Federal Reserve. The US dollar extended its rally against the Canadian currency, USD/CAD continued to climb, and closed at 1.2631.
The risk aversion mood benefitted United States 10-Year Bond Yield to another extended period of growth, which rose to 2.793%, the highest level since January 2019. Gold price rallied due to the sour market mood and global inflation, and closed at 1,948.2 as it mostly plateaued at 1952 level.
Crude oil price recovered from a low of 93.00 and closed at 94.29. Although the Organization of the Petroleum Exporting Countries (OPEC) claimed it cannot increase output to offset lost supply from banning Russian oil, the health crisis in China and its 1.5% inflation rate lowers demand, driving crude oil to be bearish.
In addition, the US Department of Labor Statistics will announce the monthly and yearly Consumer Price Index (CPI) today (12 April), excluding Food & Energy, serving as indicators of US living costs and inflation.
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Today's forex news: Federal Open Market Committee minutes Today's forex news: Federal Open Market Committee minutes extends US dollar rally
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As the Federal Open Market Committee (FOMC) has released its March meeting minutes, it confirmed market’s expectation for further interest rate hikes and plans to reduce its balance sheet. The US dollar railled and many analysts expect strong dollar trade would last for at least another three months. The 10-year yield and the 2-year yield surged to multi-year highs since early 2019 at 2.609% and 2.502% respectively.
EUR/USD dropped to 1.0893, and GBP/USD had a brief pop to 1.3107, and closed at 1.3068. With the UK domestic labor market recovering, the Bank of England may think twice about hiking interest rates beyond May.
Although a strong US dollar has reduced gold prices at 1,923.1, RJO Futures senior market strategist expects a bounceback in the next two quarters, as they anticipated the extended inflation would outpace the US Federal Reserve’s pace to raise rates .
Same goes to oil prices, while the US and International Energy Agency (IEA) members have deployed their 180 million barrels of strategic oil reserve, dragging its prices to $96.23 a barrel, but the market foresees that decrease won’t last given the glum production outlook for most Organization of the Petroleum Exporting Countries (OPEC) nations.
Low commodity prices have weakened the Australian and Canadian currencies against the US dollar, AUD/USD closed at 0.7513 and USD/CAD at 1.2542. Even though both countries enjoyed news of recovering economies and rumors of rate hikes, the news was offset by a strong dollar.
According to the FOMC minutes, no concrete decisions were made to reduce its balance sheet, the market expects a reduction in treasuries and mortgage-backed securities by 95 billion dollars per month, which is likely to begin in May, as hinted by Governor Lael Brainard yesterday (April 6) .
Inflation is likely to loom over the global economy in 2022, but with promising employment figures in western countries, a massive recession can be averted if the COVID pandemic continues to slow down and global supply chain returns to normal.
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Today's forex news: US to shrink balance sheet, strengthens USDToday's forex news: US to shrink balance sheet, strengthens the US dollar
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As the Federal Reserve (The Fed) Governor Brainard said yesterday (5 April) the US has to continue its effort to slow down inflation and shrink its balance sheet, the US dollar has strengthened against other major currencies, with oil and gold prices also dropping as aggressive monetary policy tightening loomed over the market. Later today (6 April), the Fed will release minutes of its March meeting to reveal further information on its latest plans.
One of the Fed’s primary objectives is to lower living costs of low-income US households, Brainard believed further interest rate hikes are required to curb inflation rate, i.e. lower goods prices and living costs. As a result, the EUR/USD pair continued its fall to 1.0903, GBP/USD took a sharp turn to 1.3068.
Meanwhile, The Reserve Bank of Australia (RBA) had tightening expectations of its own, though it fell short in the face of more hawkish comments from its US counterpart, AUD/USD retreated from a high of 0.7650, to around 0.7570.
In the light of increasing reports of civilian casualties in Ukraine, the US, the UK and EU have proposed new rounds of sanctions towards Russia, namely in crude oil and coal imports. However, the news is also offset by a strong US dollar, crude oil prices were volatile and closed at 101.96 per barrel.
Alternatives to the US dollar also suffered, gold prices decreased to 1,927.5 as United States 10-Year Bond Yield increased to 2.554.
Today's Forex News: EU-Russia tensions escalate; Russian-UkrainiEUR/USD ⬇️
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The euro fell as investors fretted about rising economic tensions between the EU and Russia following Russian President Vladimir Putin's reiteration of a demand that European nations pay for Russian gas in roubles, exacerbating fears that Russia could stymie energy exports to the continent. This, combined with a generalized retreat from recent euphoria about supposed progress in the resumption of Russo-Ukrainian peace negotiations on Friday, contributed to risk-off flows and a decline in global bond rates, with the latter being particularly pronounced in Europe. Thus, the euro was the G10 currency that underperformed, with EUR/USD falling 0.8 percent from intraday highs near 1.1200 to current levels in the mid-1.1000s.
The EUR/decline USD's aided the DXY's recovery, with the trade-weighted index of major USD pairings rising 0.5 percent to approximately 98.30 from weekly lows near 97.70. The upside was mostly unrelated to another increase in US inflation in February, as measured by the Core PCE Price Index, or to the latest very strong weekly jobless claims statistics, all of which bolster the economic basis for the Fed's recent hawkish tilt. Indeed, the US dollar was fairly mixed against the rest of the G10 currencies, with attention now going to Friday's release of the official US labor market report for March.
The Japanese yen was once again the top performing G10 currency, benefiting from the downside bias in global equity market activity and global bond yields, extending a much-needed month/quarter-end rebound following weeks of underperformance. USD/JPY has stabilized below 122.00. Meanwhile, the GBP/USD pair was slightly higher on the day, but stayed contained inside previous intra-day ranges in the mid-1.3100s and capped by its 21-Day Moving Average.
Finally, it was a mixed bag for the commodity-sensitive Australian, New Zealand, and Canadian currencies. USD/CAD was unchanged and was able to withstand strong losses in the crude oil complex following the announcement of the US's historic Strategic Petroleum Reserve release (1M barrels per day for the next six months). The pair remained below the 1.2500 mark and not far from previous multi-month lows hit earlier in the week in the 1.2430 range. Meanwhile, AUD/USD declined 0.3 percent to retest the 0.7500 level but stays comfortably within recent ranges and around multi-month highs in the mid-0.7500s, while NZD/USD fell 0.6 percent to retest the 0.6950 level, returning the pair to the middle of this week's approximate 0.6875-0.7000 ranges.
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Today's forex news: US rates slide, dollar losses continue.
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The dominant story in the foreign exchange markets has been the US dollar's persistent drop, as the DXY plummeted another 0.6 percent to the 97.80s, where it is now testing mid-March lows more than 1.5 percent below weekly highs. Wednesday's US data releases (ADP employment and final Q4 GDP and Core PCE estimates) were robust, which, paired with fresh hawkish Fed rhetoric, contributed to cementing expectations for a 50 basis point rate hike in May.
This, however, was inadequate to shield the US dollar from a bearish cocktail of
1) negative rate differential changes against the backdrop of decreasing US rates,
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3) excitement over the Russo-Ukrainian peace negotiations.
Regarding the latter, while skepticism over apparent progress in the negotiations this week remains high in light of Russia's ongoing attack on Ukraine, FX markets appear to be pricing in a more hopeful geopolitical scenario.
The EUR/USD pair achieved its highest level since the beginning of the month on Wednesday, climbing 0.7 percent on the day and 1.9 percent from earlier weekly lows of sub-1.0950. The euro received some independent support from the continuous rise in short-end Eurozone rates, as traders upped their expectations on ECB tightening in the aftermath of Spain's and Germany's latest preliminary March HICP inflation figures, which surprised to the upside once again.
While the euro outperformed the rest of the G10, it was far from the best, with the Swiss franc and Japanese yen taking first and second place, respectively. USD/JPY slid 0.8 percent to 122.00, a direct outcome of the day's decline in US rates, leaving it more than 2.5 percent below weekly highs as traders analyzed recent Japanese policymaker comments on recent currency losses. Meanwhile, USD/CHF witnessed an exceptionally steep 0.9 percent slide from over 0.9300 to the low 0.9200s, bringing it within a few pips of breaching its 200-Day Moving Average.
In comparison to the other G10 currencies, the kiwi gained from positive domestic data (New Home Building Consents and Business Sentiment), with the NZD/USD pair recovering slightly more than 0.5 percent to the upper 0.6900s. The Australian currency, like the loonie, has struggled to benefit from higher oil prices, with AUD/USD trading in a mediocre range about 0.7500 (still near multi-month highs) and USD/CAD hovering near 1.2500 and near-annual lows.
Finally, sterling was uneven, with GBP/USD rising to the mid-1.3100s but failing to hold above its 21-Day Moving Average for a sixth consecutive session, while EUR/GBP touched its highest level in over three months near 0.8500.
While the forex market's focus will remain on geopolitical developments and their possible impact on risk appetite/the commodities complex, economic data will remain a prominent driver, with traders also taking into account G10 monetary policy divergence. The OPEC+ meeting, the US February Core PCE, and Canadian January GDP numbers are the key events to watch in the next session, ahead of Friday's release of the US employment report, the week's most significant event. Eurozone HICP inflation data are also due on Friday and are likely to show a strong increase, similar to what Spain and Germany reported on Wednesday.
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Today's forex news: The dollar plunges amid renewed optimismEUR/USD ⬆️
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The dollar fell along with other safe-haven assets as renewed prospects for a diplomatic resolution to the Russia-Ukraine conflict gained traction. Risk appetite increased following reports indicating a de-escalation of Russian attacks near Kyiv and Chernihiv, as Russia's mediator Vladimir Medinsky announced.
Ukraine has proposed a new system of security guarantees, with Turkey as one of the primary possible guarantors. If the security guarantee system is successful, Ukraine will commit to a neutral position, which includes refraining from hosting foreign military bases on its soil. Ukraine's capital, Kyiv, wishes to hold a referendum on the country's neutrality.
Meanwhile, the US yield curve returned temporarily, with the 2-year and 10-year Treasury notes remaining around 2.40 percent, albeit the shorter note slipped to 2.35 percent. Inverted yield curves are frequently interpreted as a sign of recession.
Wall Street rallied in lockstep with its international rivals, as concerns about the Eastern European situation eased.
Central banks and prospective rate hikes have resurfaced as a topic of discussion. Europe's financial markets are pricing in a 60 basis point hike, while Philadelphia Federal Reserve President Patrick Harker emphasized the importance of deliberate rate hikes. He stated that he would not rule out a 50 basis point increase in May but would not commit. Finally, he stated that the balance sheet reduction may equate to a two-quarter-point rate hike.
The EUR/USD pair is trading close below the 1.1100 level, indicating that the pair's bullish potential remains intact. GBPUSD has struggled to gain ground, and is currently trading about 1.3100. At the close of the American session, commodity-linked currencies continue to gain, with AUD/USD trading over 0.7500 and USD/CAD trading around the 1.2480 price zone. The USD/JPY pair ended the day at about 122.90.
Commodity prices continued to fall, with WTI trading at $104.30 a barrel. Gold futures dipped to $1,890.05 per troy ounce before recovering to close around $1,917.00.
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Today's Forex News: Global upheaval boosts the dollarToday's Forex News: Global upheaval boosts the dollar
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The market tone remained gloomy, which helped the US dollar close the day with gains against the majority of its key rivals.
The Bank of Japan provided the first impetus. The central bank said that it would purchase an unlimited quantity of 10-year JGBs at 0.25 percent to protect the yield cap. This is the central bank's second intervention in the foreign exchange market this year. The decision drove the JPY into a sell-off spiral, which aided the greenback's rise across the foreign exchange market. USD/JPY reached a high of 125.05 before settling at 123.60.
The yield on the 10-year Treasury note reached a new multi-year high of 2.557 percent before falling to 2.46 percent and precipitating a bearish reaction in the dollar.
On the battlefield, Russian legislator Ivan Abramov stated Monday that the G7's unwillingness to pay for Russian gas in roubles would result in an unambiguous halt to shipments. German Finance Minister Christian Lindner stated that his country is prepared if Moscow retaliates against the G-7 and that businesses must fight Russia's requests for RUB-denominated gas payments.
Wall Street ended the day in the red, but rebounded ahead of the close on news that Russia is willing to make some concessions, including dropping its desire for Ukraine to be "denazified" and allowing the country to join the EU if it maintains its neutrality.
Additionally, China announced additional lockdowns, this time affecting Shanghai. The news heightened fears of inflation and supply chain problems.
Andrew Bailey, Governor of the Bank of England, warned against fluctuations in commodity markets endangering financial stability. He also underlined that inflation poses concerns on both sides. GBPUSD dipped to 1.3065 and closed just below 1.3100 on the day. The EUR/USD pair fell to a new two-week low of 1.0944, encountering sellers as it approached the 1.1000 level.
Commodity-linked currencies posted minor losses on the day. The AUD/USD pair is trading slightly above the 0.7500 level, while the USD/CAD pair is trading higher at 1.2530. Gold prices fell and ended the day at $1,926 a troy ounce, while crude oil prices fell as well, with WTI presently trading around $104.60 a barrel.
The macroeconomic calendar, with the emphasis turning to the release of US employment statistics at the conclusion of the week.
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Today's Forex News: Expect optimism to fadeToday's Forex News: Expect optimism to fade
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USD/JPY reached a new multi-year high of 122.40.The US dollar finished mostly lower today.
The EUR/USD pair continues to struggle with the 1.1000 level, failing to extend advances above it. The GBP/USD exchange rate has stabilized around 1.3180, while commodity-linked currencies continue to advance versus their American counterparts. The AUD/USD pair reached a high of 0.7527, while the USD/CAD pair saw a low of 1.2509.
US President Joe Biden and European NATO allies are bracing for the possibility that Moscow would launch a nuclear attack. Additionally, they discussed assisting Ukraine with anti-ship missiles and reiterated that any gold transaction involving Russia's central bank is subject to existing sanctions. The headline supported the yellow metal, which soared to a new weekly high of $1,966.14 a troy ounce before settling near that level.
On the other hand, crude oil prices extended their recent increases, finishing the day barely altered. WTI is currently trading around $113.20 per barrel.
Later, French President Emmanuel Macron stated that no decision had been made on sanctions against Russian oil, gas, and coal. US President Joe Biden stated that Russia should be kicked out of the G-20.
While Germany, the UK, France and Italy, the top countries affected by this outbreak, continue to see an increase in new global health crisis cases, blamed on the Omicron BA.2 variant. As of now, there have been no restrictive measures in place, but on the contrary, the latest restriction is being lifted.
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Today's forex news: More upheaval to comeToday's forex news: More upheaval to come
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The dollar closed in a range on Wednesday as investors struggled to differentiate between mostly worrying headlines. The market's mood was dampened by rising crude oil prices amid intensifying tensions between Russia and western nations.
West Texas Intermediate crude soared to $115.37 per barrel, while Brent traded as high as $118.41 per barrel. Gold, on the other hand, traded within its range, gaining intraday but remaining below the weekly high of $1,941.24 per troy ounce.
European equities dipped somewhat, putting pressure on their American counterparts. US indexes pared Tuesday's losses, but still ended the day with significant losses.
Government bond prices recovered from multi-year lows, resulting in yields retracting from multi-year highs. The yield on the ten-year US Treasury note peaked at 2.417 percent, before falling around ten basis points and eroding demand for the dollar.
Secretary of State Antony Blinken said that the US government has filed official charges against Russian forces for war crimes in Ukraine. On Thursday, US Vice President Joe Biden will meet with his NATO counterparts in Europe, and additional sanctions on Moscow are expected to be revealed. Additionally, leaders will address the Iran nuclear accord.
The pound was one of the worst performers, with GBP/USD sliding to 1.3147 following increased UK inflation and the release of the Budget report. According to official figures, the Consumer Price Index increased to 6.2 percent year on year in February, up from 5.5 percent in January. Additionally, Finance Minister Rishi Sunak proposed a fresh budget that includes changes to inflation and growth. Tax growth forecasts were reduced downward from 6% to 3.8 percent. GBP/USD is now hovering around 1.3200.
German Chancellor Olaf Scholz declared that the government would accelerate the construction of its own LNG terminals, citing concerns that sanctions against Moscow energy might plunge the area into recession. According to preliminary estimates, EU consumer confidence fell to -18.7 in March. EUR/USD is clinging to a narrow range over 1.1000.
Commodity currencies gained from rising oil and gas prices, and received a late lift from surging gold. The AUD/USD currency pair is flirting with the 0.7500 level, while the USD/CAD currency combination is trading near a new monthly low of 1.2541.
The USD/JPY pair extended advances and finished slightly above the 121.00 level, while the USD/CHF pair dipped below the 0.9300 level.
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Today's forex news: US stocks rallied while the dollar weakensToday's forex news: US stocks rallied while the dollar weakens
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After the hawkish, interest-hiking comments made by the Chairman of the Federal Reserve (the Fed) yesterday (22 March), the US dollar has been weakened against other major currencies, while the US stock market has rallied unexpectedly to a 5-week high. The risk-on mood among investors have shifted their capital to stocks, lowering gold price to 158.85 per ounce. As the Fed's Chair will give a speech later today (23 March), investors will keep a close eye for further pointers to the Fed's next course of action.
The British Pound gained momentum and reached a near two-week high around the 1.3200 level, with a closing price of 1.3263 against the dollar, although investors do not expect an extended rising trend due to a weaker UK economy and higher UK domestic inflation.
The latest comments from the Governor of Reserve Bank of Australia (RBA) were less hawkish than the Fed, as he states “(The RBA) will not respond until there is evidence of pervasive price pressures.” The dovish comment relieved market worries for another round of interest rate hike, and strengthened the Aussie currency against the greenback, with a closing price of 0.7467.
However, the Euro could not take advantage of the broad dollar’s weakness. The EUR/USD pair rose moderately and settled, closing at 1.1027. Meanwhile, the EU remains undecided whether to initiate the embargo against Russian-imported crude oil. The breathing space allowed crude oil’s closing price to return to 109.47 per barrel, and strengthened the dollar against the Canadian currency at 1.2568, thanks to lower commodity prices.
Though the US stock market rode the bullish trend, the United States 10-Year Bond yield also increased to 2.377%.
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Today's forex news: Global Inflation Pressures Further Interest Today's forex news: Global Inflation Pressures Further Interest Rate Hikes Among Central Banks
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Global Investors paid close attention to Federal Reserve (Fed) Chair Jerome Powell’s speech yesterday (21 March), as he believed the US inflation is much too high, and the Fed has, and will use the necessary tools to restore price stability. The market anticipated six more interest rate hikes this year from the Fed, which dragged the EUR/USD pair to 1.1014, with gold price up to 1.929.5.
The sentiment of further interest rate increase is shared among his European counterparts as well, because their economy is more reliant on the now-disrupted supply from the warring states of Russia and Ukraine. As the European Union is considering imposing an oil embargo on Russia to deter its aggression, the news further weakened the Euro and boosted crude oil prices to $109.97 per barrel. Strong commodity prices see the Canadian currency trade flat against a weakened US dollar at 1.2592.
On Wednesday (23 March), the Office for National Statistics in the UK will provide a series of latest economic data, of which the unemployment rate is expected to increase to 5.9%, and other figures pointing to an extended period of inflation. Since investors predict the UK suffering a higher level of inflation than the US, the British Pound falls short with the dollar at 1.3165.
AUD/USD falls to 0.74 as the public awaits comments from the Governor of Reserve Bank of Australia later today, in order to find out if the Australian government is to follow US and Europe on a path of continuous further interest rate hikes, which many fear are not sufficient to curb inflation.
United States 10-Year Bond continues its bullish trend, with a yield of 2.317%.
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Today's forex news: Bank of England joins the rate hike bandwagoEUR/USD ⬆️
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The Bank of England has joined the Federal Reserve in increasing its interest rate to 7.5%, in order to slow down domestic inflation, which has been aggravated by rising energy prices due to Russian invasion in Ukraine. Such a decision has extended the dollar’s fall against major currencies: GBP/USD closed at 1.3160, and EUR/USD closed at 1.1086.
Both the UK and US shared a positive note on their respective economies – their unemployment rates are lower than expected. Yesterday (March 17), the US Department of Labor announced 214,000 people have filed for Initial Jobless Claims, a 10-week low against the expected figure of 200,000.
The same day, the U.S. House of Representatives had voted in favor of removing "most favored nation" trade status for Russia and Belarus. Despite not being as reliant on Russia’s energy supply as its European counterpart, the decision prompted an upswing in metals and commodities prices. Gold prices closed at 1,942.66, with the AUD/USD pair increasing to 0.7374, partly due to its sensitivity to commodity prices.
As further US sanctions against Russia will be in effect in April, the imminent drop in supply extended the swing in oil prices, closing at 102.98 per barrel. In return, the dollar has weakened against the oil-exporter Canadian currency, closing at 1.2625.
Later today, Statistics Canada will announce its latest month-on-month Retail Sales figure, shedding light on the performance of the retail sector.
By the closing time of March 17, the United States 10-Year Bond had a yield percentage of 2.192.
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US Dollar Falls after Hawkish Fed AnnouncemeToday's forex news: US Dollar Falls after Hawkish Fed Announcement
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On Wednesday, the U.S. Federal Reserve raised interest rates to 2.5%, also preparing further measures to contain inflation. However, the hawkish attitude was not thorough enough to strengthen the dollar against most major currencies, with EUR/USD closing at 1.1032 and GBP/USD at 1.3145. Meanwhile, investors await the Bank of England’s Interest Rate Decision – which will be announced later today (17 March).
The AUD/USD pair saw a rise with the closing price at 0.7289, thanks to a positive job report indicating lower-than-expected unemployment rate at 4%, and an increase in gold prices at a closing price of 1,909.2, which is another response to the restrictive US monetary policy.
US dollar struck a six-year high at 119.12 against Japanese Yen, as the east Asian country experienced a 7.3 magnitude earthquake yesterday (16 March), investors look to a safe haven currency until the earthquake’s aftermath is settled.
Crude Oil, on the other hand, has settled lower at $95.04 per barrel. Since the US has increased its oil inventory, combined with optimism for other oil-producing OPEC members to increase supply, and China’s COVID outbreak slowing global consumption.
Major U.S. stock indexes have surprisingly rallied despite the Federal Reserve’s decision to increase borrowing costs.
United States 10-Year Bond Yield stabilized its rise, closing at 2.187%.
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