Forex Today: Hawkish Fed smashes reflation trades, yields; gold bounces amid risk-aversion
|Here is what you need to know on Monday, June 21:
A risk-aversion wave has gripped the markets starting out a fresh week, as the Fed’s hawkish turn prompts dialing back of reflation bets while weighing heavily on the Treasury yields and equities.
The US returns on the market hit the lowest levels in four months, with the 30-year yields back below the 2% level. The US Treasury yield curve flattened after the Fed projected two interest-rate hikes by the end of 2023.
The Asian stocks are a sea of red, as the Japanese benchmark Nikkei 225 index sheds almost 4%. The futures tied to the S&P 500 index drops 0.50% towards 4,100.
Across the G7 fx space, the yen emerges the strongest amid tumbling yields and risk-off mood, hammering USD/JPY below 110.00. Meanwhile, the Antipodeans advances, as investors believe that the Emerging Markets’ central banks are likely to outdo the Fed’s tightening pace. AUD/USD hovers around 0.7500, shrugging off downbeat Australian Preliminary Retail Sales.
EUR/USD eases towards 1.1850, as the US dollar holds onto last week’s gains amid sooner-than-expected Fed rate hikes, especially after St. Louis Fed President James Bullard said that he sees a Fed lift-off in late 2022.
GBP/USD drops back below 1.3800 amid Brexit concerns and the delay in the UK reopening, in light of rising worries about the Delta COVID-19 variant.
Gold is attempting a bounce from two-month lows amid falling yields, although broadly firmer US dollar is likely to limit the rebound.
Bitcoin has recaptured $34,000 but remains in the hands of the sellers, as Bitcoin hashrate suffers a massive drop on China’s continued crackdown on BTC mining.
The economic calendar is relatively scarce, with the focus on the Fedspeak.
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.