Forex Today: Dollar surges on tightening hopes

Valeria Bednarik FXStreet

What you need to know on Thursday, August 5:

The dollar is up after US Federal Reserve Vice-Chair Clarida said that if core inflation hits 3% this year, he would consider it “much more” than a moderate overshoot. He added that he expects conditions for raising interest rates to be met by the end of 2022 if inflation and employment outcomes meet his forecasts. Additionally, the ISM Services PMI jumped to 64.1 in July, beating expectations. The ADP survey, however, showed that the private sector added just 330K in July.

On Thursday, the focus will be on the Bank of England. The central bank is having a Super Thursday and is set to leave its monetary policy unchanged and release new forecasts in its Monetary Policy Report. Governor Andrew Bailey is scheduled to offer a speech afterwards. Market participants will be looking for hints of tightening.

EUR/USD trades at weekly lows around 1.1840. The GBP/USD pair hovers around 1.3900, unchanged as the BOE looms. Commodity-linked currencies edged lower, with the AUD/USD pair back below 0.7400 and USD/CAD trading around 1.2550.

The USD/JPY pair recovered from a daily low of 108.71, a level that was last since in May, to the current 109.40 price zone, amid a U-turn in the dollar’s demand. Japan is struggling with an upsurge in coronavirus cases and the head of the local Medical Association called for a nationwide state of emergency.

Gold jumped to $ 1.831.71 a troy ounce but trimmed gains and finished the day at around 1,812. Crude oil prices were sharply down, with WTI settling at $ 68.00 a barrel. The U.S. Energy Information Administration said crude stockpiles rose by an unexpected 3.6 million barrels last week, putting pressure on the black gold.

Stablecoins thrive in Bitcoin’s shadow but continue to face challenges and regulatory pressure

Like this article? Help us with some feedback by answering this survey:

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

EUR/USD stays well offered below 1.1800

The selling pressure on EUR/USD is picking up pace, with the pair slipping decisively below the key 1.1800 level and sliding to fresh two week lows as Wednesday’s session draws to a close. The move lower comes as the US Dollar finds renewed strength after the latest round of US data and the release of the FOMC Minutes. Next of note on the docket will be the US weekly Initial Jobless Claims.

GBP/USD reaches multi-day lows near 1.3500

GBP/USD reverses its initial upside momentum and is now adding to previous declines, approaching the 1.3500 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs near the $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Bitcoin has found or is near a bottom, extended consolidation to follow: K33

Bitcoin (BTC) is nearing or has already established a bottom, which could be followed by a sustained period of slow price movement, according to K33.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.