Forex Today: Dollar keeps its footing ahead of housing data

Eren Sengezer FXStreet

Here is what you need to know on Thursday, August 18:

The US Dollar Index (DXY) registered its highest daily close in three weeks on Wednesday and continued to edge higher during the Asian reading hours on Thursday. With the market mood remaining cautious, the dollar continues to outperform its rivals. In the European session, Eurostat will release the final version of the July inflation data, which is not expected to show any changes to the flash estimate of the annual HICP of 8.9%. In the second half of the day, July Existing Home Sales and the weekly Initial Jobless Claims data will be featured in the US economic docket.

Late Wednesday, the Federal Reserve's July policy meeting minutes revealed that all participants agreed that a 75-basis-point interest rate hike was appropriate. "Participants concurred that future rate hikes would depend on incoming information and judged that at some point it would be appropriate to slow the pace of increases," the publication further read and failed to trigger a noticeable market reaction.

During the Asian session, the Australian Bureau of Statistics reported that Unemployment Rate edged lower to 3.4% in July. On a negative note, Employment Change arrived at -40.9K, missing the market expectation for an increase of 25K by a wide margin. Following Wednesday's steep decline, AUD/USD stays under bearish pressure and continues to push lower toward 0.6900.

EUR/USD fluctuates in a relatively tight range above 1.0150 after having closed the previous day virtually unchanged. Earlier in the day, European Central Bank (ECB) executive board member Isabel Schnabel said that a technical recession in the euro area was possible.

GBP/USD came under renewed bearish pressure in the early European session on Thursday and started to decline toward 1.2000.

USD/JPY capitalized on rising US Treasury bond yield and climbed above 135.00. At the time of press, the pair was up 0.2% on the day at 135.30.

With the 10-year US Treasury bond yield rising more than 3% on Wednesday, gold closed the third straight day in negative territory and was last seen moving sideways at around $1,760.

Bitcoin lost more than 2% before going into a consolidation phase below $23,500. Ethereum registered losses for the fourth straight day on Wednesday and was last seen consolidating its latest decline near $1,850.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.