Forex Today: Markets turn cautious ahead of mid-tier data releases

Eren Sengezer FXStreet

Here is what you need to know on Tuesday, June 20:

Following a three-day weekend in the US, trading conditions normalize on Tuesday and markets seem to have adopted a cautious stance. Housing Starts and Building Permits data for May will be featured in the US economic docket. Several Federal Reserve (Fed) policymakers, including St. Louis Fed President James Bullard and NY Fed President John Williams, will be delivering speeches later in the day.

During the Asian trading hours, the People's Bank of China (PBoC) announced that it lowered the benchmark Loan Prime Rates (LPRs) by 10 basis points (bps) as expected. With this decision, the one-year LPR declined from 3.65% to 3.55%, while the five-year LPR got cut down to 4.20% from 4.30%. This development reminded markets of the loss of momentum in China's economic growth and caused investors to move away from risk-sensitive assets. At the time of press, US stock index futures were down around 0.3% on a daily basis.

Meanwhile, the Minutes of the Reserve Bank of Australia's (RBA) June monetary policy meeting revealed that the board considered a rate rise of 25 basis points or holding the policy rate steady and reconsidering an increase at later meeting. Arguments were "finely balanced" but the board decided the case for an immediate hike was stronger, the RBA noted in its publication. AUD/USD came under heavy bearish pressure early Tuesday and was last seen trading deep in negative territory at around 0.6800.

EUR/USD registered small losses on Monday but didn't have a difficult time regaining its traction. In the European morning, the pair continues to edge higher toward 1.0950. Eurostat will release Construction Output data for April later in the session.

Following Monday's downward correction, GBP/USD staged a rebound to the 1.2800 area early Tuesday. On Wednesday, the UK's Office for National Statistics will publish the Consumer Price Index (CPI) data for May.

USD/JPY climbed above 142.00 for the first time since November in the Asian session on Tuesday but reversed its direction with the Japanese Yen benefitting from safe-haven flows. As of writing, the pair was stretching lower toward 141.50.

Gold price recovered back above $1,950 after having closed modestly lower on Monday. The benchmark 10-year US Treasury bond yield is down nearly 1% early Tuesday, helping XAU/USD find a foothold.

Bitcoin rose nearly 2% on Monday but lost its bullish momentum near $27,000. Ethereum continues to fluctuate in a narrow range slightly above $1,700.

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.

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