What you need to take care of on Friday, June 10: The American dollar soared on Thursday as fears took over financial markets. T
What you need to take care of on Friday, June 10:
The American dollar soared on Thursday as fears took over financial markets. The catalyst was the European Central Bank, as Lagarde & Co. reaffirmed their commitment to raise rates in July, although they anticipated a 25 bps move. Investors were hoping for a 50 bps hike amid inflationary pressures. She added that more hikes are likely in the near future, although the scale of each increment would depend on the medium-term inflation outlook.
Additionally, the central bank upwardly revised the annual inflation forecast, now seen at 6.8% for this year, then decreasing to 3.5% in 2023 and to 2.1% in 2024. On the other hand, growth has been slashed to 2.8% in 2022 and to 2.1% for the next two years.
The EUR/USD pair plummeted, now trading near the 1.0600 price zone.
The GBP/USD pair fell sub-1.2500, affected by risk aversion but with the Pound was also hurt by comments from UK Prime Minister Boris Johnson, who said that the kingdom is in a better position than in the past when the nation has faced economic difficulties, although he added that there is no quick fix to the situation in Ukraine, one of the reasons of mounting price pressures.
The Bank of Canada published a bank stress test, revealing that major banks would incur huge financial losses but would remain resilient in the event of a large and lasting economic shock. The document also showed that monetary policy tightening would put the financial system’s resilience to the test and may exacerbate current financial vulnerabilities. The USD/CAD pair is at1.2700 back from an intraday low of 1.2517. Softer crude oil prices weighed on the CAD as the black gold settled at $ 121.10 a barrel.
The AUD/USD gave up to Wall Street’s sell-off and finished the day just below the 0.7100 threshold. Gold weakened within range, now trading at around $1.847 a troy ounce.
USD/CHF and USD/JPY edged higher amid the dollar’s strength and higher US government bond yields. The 10-year T note yielded as much as 3.073%, a multi-week high.
US indexes closed dip in the red, with the Nasdaq Composite being the worst performer, down 2.50%.
The focus will be on US inflation on Friday, as the country will release the May Consumer Price Index, foreseen stable at 8.3% YoY. However, the White House warned on Wednesday that the government expects inflation numbers to be “elevated.”
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