Forex Today: Flight to safety continues at the start of the week

Eren Sengezer FXStreet

Here is what you need to know on Monday, June 13:

Markets remain risk-averse at the beginning of the week and the greenback capitalizes on safe-haven flows. The US Dollar Index rises for the fourth straight day and closes in on the multi-year high it set on May 13. The benchmark 10-year US Treasury bond yield stays within a touching distance of 3.2% and US stock index futures are down between 1.5% and 2.5%. The economic docket will not feature any high-impact data releases and the risk perception is likely to continue to drive the market action.

On Friday, the data from the US showed that the Consumer Price Index (CPI) jumped to a fresh multi-decade high of 8.6% on a yearly basis in May. This print surpassed the market expectation of 8.3% and caused investors to seek refuge. The S&P 500 Index lost nearly 3% and closed the previous week at 3,900. Over the weekend, the Financial Times reported that 70% of polled experts see the US economy tipping into recession next year.

US CPI reverses to new four-decade high in May threatening GDP.

After spending the Asian session in a relatively tight channel, EUR/USD started to edge lower amid broad-based dollar strength in the European morning. The pair was last seen losing 0.3% on a daily basşs at 1.0485.

GBP/USD slumped to its lowest level since May 16 below 1.2250 on Monday. The data published by the UK's Office for National Statistics revealed that the UK economy contracted by 0.3% on a monthly basis in April, compared to the market expectation for an expansion of 0.2%. Other data from the UK showed that the Manufacturing Production and Industrial Production declined by shrank by 1% and 0.6%, respectively, in the same period.

USD/JPY surged to its highest level in more than 20 years above 135.00 during the Asian trading hours on Monday. Japanese Chief Cabinet Secretary Matsuno said that they were ready to take appropriate actions on exchange movements if necessary and triggered a downward correction in the pair. Similarly, Bank of Japan Governor Haruhiko Kuroda acknowledged that the recent sharp drops in the yen's exchange were undesirable and not good for the economy. USD/JPY was last seen posting modest daily gains at 134.75.

Gold rose sharply on inflation fears late Friday and closed the week at $1,870. With the benchmark 10-year US T-bond yield staying in positive territory, XAU/USD is retreating toward $1,860 on Monday.

Bitcoin extended its slide over the weekend and ended up losing more than 11% last week. BTC/USD stays on the back foot and was last seen testing $25,000, losing nearly 5% on the day. Ethereum registered losses for the 10th straight week and touched its weakest level since February near $1,300 on Monday.

Author

Eren Sengezer

FXStreet

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.

GBP/USD gains as easing Fed hike bets weigh on US Dollar

GBP/USD continues its winning streak for the ninth consecutive day, trading around 1.3390 during the Asian hours on Tuesday. The currency pair rises as the US Dollar faces headwinds as market participants scale back expectations for Federal Reserve rate hikes this month and in September.

EUR/USD holds above 1.1400 as markets focus on Middle East news

EUR/USD struggles to gain traction and trades in a narrow channel above 1.1400 on Tuesday after failing to reclaim 1.1450. The pair's upside remains capped amid a modest recovery in the safe-haven US Dollar, as renewed tensions in the Strait of Hormuz and Asian tech sell-off fuel risk aversion.

Gold sticks to losses as inflation fears lift US bond yields and USD amid Hormuz risks

Gold maintains its offered tone heading into the European session, albeit it holds above the $4,100 mark. Crude oil prices edge higher amid renewed tensions in the Strait of Hormuz, reviving inflationary concerns. This, in turn, triggers a fresh leg up in US Treasury bond yields, offering some support to the US Dollar, and weighing on the non-yielding yellow metal for the second straight day.

Bonk extends correction after $20 million hack from BonkDAO treasury

Bonk remains under pressure, trading below $0.0000044 after losing over 10% in the previous day. Monday’s correction occurred as Bonk Decentralized Autonomous Organization announced a governance exploit that resulted in the theft of $20 million worth of BONK tokens from its treasury.

Bye, forward guidance: How to trade when central banks choose silence

Central banks have spent years telling markets what might come next. Now, traders face the possibility that they say a lot less. From the Federal Reserve to the European Central Bank and the Bank of England, policymakers are pushing back against forward guidance, arguing that the current world demands more flexibility.