Forex Today: Dollar bends but does not break
|What you need to take care of on Tuesday, June 21:
The American dollar is ending Monday with modest losses against most major rivals. The better tone of European indexes and a holiday in the US, however, resulted in choppy trading across the FX board.
The EUR/USD pair is currently battling the 1.0500 level amid discouraging local news. European Central Bank President Christine Lagarde testified before the Committee on Economic and Monetary Affairs of the European Parliament and repeated that the central bank intends to raise the key interest rate by 25 bps in their July policy meeting. Furthermore, she added that they will hike rates in September as inflation is “undesirably high.”
The Ukraine war has reduced gas flows from Russia to the Union, with major countries looking to revive coal-fired power plants as an alternative. The Kremlin noted that they are to send gas to the EU, claiming gas flows have fallen because of missing turbines in NordStream as a result of sanctions. German Chancellor Olaf Scholz said that is not plausible.
Brexit woes continue to hurt the pound after the UK government announced plans to change parts of the Northern Ireland Protocol, despite the EU claiming it breaches international laws. GBPUSD hovers around 1.2250.
Federal Reserve chief Jerome Powell will testify on the Semi-Annual Monetary Policy Report before the Senate on Wednesday and will repeat its testimony before a different commission on Thursday. Market participants will be looking for clues about US economic developments.
Commodity-linked currencies got to advance against the greenback, despite the sour tone of gold and oil. The bright metal eased to $1,835 a troy ounce, while WTI is now trading at around $108.80 a barrel. The USD/CAD pair is down to 1.2990.
AUD/USD trades around 0.6950 ahead of the RBA Meeting Minutes. The document may shed some light on why policymakers hiked the cash rate by 50 bps and whether they plan to keep raising rates by more than 25 bps per month.
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Speculative interest remains concerned about skyrocketing inflation and slowing economic growth, which means markets could suddenly experience risk-off movements.
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