The Greenback collapsed in response to the softer-than-expected US inflation readings in June, at the time when investors now see the Fed cutting rates as soon as at its September gathering.
Here is what you need to know on Friday, July 12:
The USD Index (DXY) deflated to multi-week lows and visited the 104.00 region in the wake of disappointing US CPI data and declining US yields. Producer Prices and the preliminary Michigan Consumer Sentiment gauge will take centre stage on July 12.
EUR/USD rose further and managed to finally retest the 1.0900 region, although that move fizzled out somewhat afterwards. German Wholesale Prices and Current Account results are expected on July 12.
GBP/USD advanced to levels last seen a year ago near 1.2950 following the sell-off in the Greenback. There are no scheduled releases in the UK on July 12.
USD/JPY receded to monthly lows and approached the 157.00 zone following another suspected FX intervention move by Japanese officials. The final Industrial Production results will be released on July 12.
AUD/USD extended its monthly recovery and climbed to levels just pips away from the 0.6800 hurdle. The Australian calendar will be empty on July 12.
The weaker Dollar and market chatter around rate cuts by the Fed prompted prices of WTI to add to Wednesday’s gains beyond the $83.00 mark per barrel.
Prices of Gold advanced markedly and surpassed the $2,420 mark per ounce troy amidst the Dollar’s sell-off, diminishing yields and increasing rate cut bets. By the same token, Silver improved to the vicinity of the $32.00 mark per ounce, or six-week highs.
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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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