What you need to know on Friday, June 18:
The American currency extended its gains against most of its major rivals, except the JPY, which strengthened on the back of falling government bond yields. Nevertheless, market players continued to price in the latest hawkish stance from the US Federal Reserve, which hinted at two rate hikes in 2023 while upgrading growth and inflation forecast.
The EUR/USD pair traded as low as 1.1891, while GBP/USD fell to 1.3895, bouncing just modestly from such lows. The sour tone of equities exacerbated high-yielding currencies’ weakness.
Commodity-linked currencies advanced at the beginning of the day amid strong New Zealand GDP and upbeat Australian employment figures, but the greenback overshadowed it all and resumed its advance, pushing rivals to multi-month lows. The USD/CAD pair trades around 1.2350, its highest since late April. AUD/USD flirted with the year low at 0.7531, with a break below the level opening the door for a steeper slide.
Gold plummeted to $1,767.19 a troy ounce, while crude oil prices were also down, but managed to bounce ahead of the close. WTI settled at $71.00 a barrel.
US Treasury yields retreated from post-Fed peaks. The yield on the 10-year Treasury note currently stands around 1.51% after hitting 1.59%.
Wall Street started the day in the red, although indexes managed to trim some losses ahead of the close. The DJIA and the S&P500 closed in the red, but the Nasdaq added over 100 points.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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