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Forex Today: Dollar holds firm amid risk aversion

Here is what you need to know on Friday, September 16:

The dollar continues to benefit from safe-haven flows on the last trading day of the week with the US Dollar Index stretching higher toward 110.00. US stock index futures are down between 0.5% and 0.8% in the early European morning and the benchmark 10-year US Treasury bond yield stays slightly below 3.5%. Eurostat will release revisions for August HICP inflation figures and the University of Michigan will publish the preliminary September Consumer Sentiment Index data ahead of the weekend.

US Consumer Sentiment Preview: Every 0.1% deviation in inflation gauge to trigger wild dollar moves.

Following mixed macroeconomic data releases from the US on Thursday, Wall Street's main indexes ended up closing the day deep in negative territory. Ahead of the Fed's policy announcements next week, the CME Group's FedWatch Tool shows that markets are pricing in a 26% probability of a 100 basis points rate hike, not allowing US stocks to stage a rebound. 

Meanwhile, the data from China showed earlier in the day that Retail Sales rose by 5.4% on a yearly basis in August, surpassing the market expectation of 3.5%. Additionally, Industrial Production expanded by 4.2% in the same period, compared to analysts' estimate of 3.8%. Despite these upbeat data, the market mood continues to sour.

EUR/USD managed to post small daily gains on Thursday but failed to stabilize above parity. The pair was last seen trading modestly lower on the day at 0.9985. European Central Bank (ECB) Vice President Luis de Guindos said on Friday that they don't have any estimates of the terminal rate.

GBP/USD lost nearly 100 pips on Thursday and started to push lower toward 1.1400 early Friday with the risk-sensitive British pound struggling to find demand in the current market environment.

Following Wednesday's slump, USD/JPY is having a hard time gathering recovery momentum and trading in a relatively narrow range below 144.00.

A technical selloff got triggered after gold broke below the key $1,680 support on Thursday. XAU/USD was last seen trading at its weakest level in over two years at $1,660. On a weekly basis, the yellow metal is down more than 3%. Rising US Treasury bond yields put additional weight on the pair throughout the week as well.

Gold Price Forecast: XAU/USD refreshes yearly low near $1,660 as strong yields propel US dollar.

Bitcoin broke below the key $20,000 support late Thursday and was last seen trading flat on the day at around $19,750. Ethereum lost nearly 10% on Thursday and seems to have gone into a consolidation phase at around $1,500. 

Author

Eren Sengezer

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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