Forex today: dovish Yellen testimony, bullish Q&A, dollar down

Ross J Burland FXStreet

Forex today was all about Yellen who delivered a relatively candid testimony, enough for markets to be concerned about anyway, with respect to future rate hikes, or the lack of for the time being.

In Yellen's semi-annual testimony before Congress today, she essentially reinforced what was already told to markets back in the previous Open committee meeting with respect to the themes for interest rate and balance sheet policy. Overall, traders can probably expect announcements in the September meeting around the balance sheet that could likely take effect in October, while in terms of interest rates, markets might have to wait until the end of the year again before the Fed are comfortable with their inflation target.

Elsewhere, the Beige book was positive and offered signs that the US could indeed be turning a corner after a dismal first half of the year, equating to a possible pick up of inflation towards the Fed's target, supporting the dollar into the close today.

DXY has been trading in a range of 95.511 - 95.980 and remains under pressure, albeit starting to correct off the lows, currently trading at 95.73 spot. US yields were closing down -1.81% having been in a range between 2.2999% and 2.3569%.

EUR reached a fresh year to date high of 1.1489 before settling at 1.1420 and down 0.41% on the day. GBP settles at 1.2880 +0.27% from 1.2812 lows on rosy jobs picture. Yen as at 113.18 by the close, having ranged between 112.93 - 113.97, -0.67%. USD/CAD was closing at 1.2738 and down - 1.37% and making for a 13 month low on a very hawkish outcome from the BoC and the rate hike. AUD was in a range of 0.7635 - 0.7685, up +0.52% on the day while the Kiwi was also up on the day, +0.48% at 0.7260.

Day ahead from Asia

China Trade Balance USD Jun
NZ Food Price Index MM Jun
JP Foreign Bond Investment
JP Foreign Invest JP Stock

Key notes from US shift

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.