Here is what you need to know on Friday, July 16:
The dollar is off the highs as markets attempt a recovery after a risk-off day on Thursday. Comments from Fed Chair Powell and his colleagues caused uncertainty. US retail sales and consumer sentiment are eyed. The yen is down after the BOJ and the kiwi benefits from strong inflation figures. Cryptocurrencies continue their slow decline.
Federal Reserve Chair Jerome Powell said that inflation is uncomfortably high but still seen as transitory, causing unease in stock markets. He added that the bank is unsure how high the labor force participation rate can rise. His colleague James Bullard supported tapering bond buys while another, Charles Evans, forecasts a rate hike only in 2024, perhaps late 2023.
The dollar benefited from the risk-off mood on Thursday and has edged lower on Friday as the mood improves. US Retail Sales are projected to have dropped by 0.4% in June, a second consecutive drop, while the Control Group is forecast to have risen last month. Consumption is central to America's economy.
See US June Retail Sales Preview: Analyzing major pairs' reaction to previous releases
Later in the day, the University of Michigan's preliminary Consumer Sentiment Index for July is expected to edge higher. Investors will be watching the inflation expectations components.
See US Michigan Consumer Sentiment Index July Preview: Are inflation expectations changing?
The yen stands out with falls after the Bank of Japan left its interest rate unchanged but downgraded its growth forecast to 3.8% from 4% for fiscal 2021/22. USD/JPY is moving toward 110.
NZD/USD is benefiting from a 1.3% QoQ inflation increase in New Zealand, nearly double the expectations. The news comes after the Reserve Bank of New Zealand announced the end of its bond-buying scheme. Rate hike expectations have risen.
Bank of England member Michael Saunders sent sterling higher by suggesting it is time to end bond buying and tighten as inflation rises. Some speculate the BOE could raise rates before the Fed. GBP/USD is trading above 1.38 as investors await Britain's reopening on Monday coming despite another leap in COVID-19 cases.
EUR/USD is hovering around 1.18, off the lows. Final eurozone inflation figures are set to confirm the 1.9% annual increase in June. Concerns about rising covid cases remain prevalent.
Top cryptocurrencies have been extending their gradual decline, with Bitcoin slipping below $32,000 and Ethereum nearing $1,900. Dogecoin is also feeling the heat.
Dogecoin Price Forecast: DOGE at an inflection point as momentum builds to the downside
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.