Forex Today: Houston, we have a problem, US coronavirus, Fed gloom, crash markets, consumers eyed

Here is what you need to know on Friday, June 12:

Markets are trying to stabilize after a massive sell-off risk-off Thursday, which saw stocks and oil crashing and the dollar surging. Fears of a second US coronavirus wave, Fed pessimism, and profit-taking are behind the move. COVID-19 figures and Consumer Sentiment are eyed.

The disease is spreading in around two dozen US states, with the most pronounced outbreaks in California, Florida, and Texas – the latter considering reopening a special hospital in Houston. A local official said the city is on the "precipice of disaster" and reinstating stay-at-home orders is on the cards.

US Treasury Secretary Steve Mnuchin said the US will not shut down the economy, as it may cause more damage. He also insisted that tracing and testing capacity has been beefed up. President Donald Trump's campaign announced a rally in Oklahoma, where participants are asked to waive liability for potentially contracting coronavirus. 

The University of Michigan's preliminary Consumer Sentiment Index for June will show if shoppers feel confident to spend. Starbucks recently reported that consumption in May, including in the last week, remained subdued despite looser restrictions. 

Consumer Sentiment Preview: Optimism and how to get it

Another reason for the market misery – at least the temporary rout – stems from the Federal Reserve's pessimism. The world's most powerful central bank pledged low rates and ongoing bond-buying as it foresaw a return to pre-pandemic output not before 2022. 

Market participants also cite profit-taking as a reason for the sell-off after a quick recovery. The reluctance of Asian markets to follow the magnitude of the fall in Wall Street seems to strengthen the theory of a correction rather than an outright change of course, yet the next moves in the US are critical. 

Gold prices have been relatively stable, holding onto gains made after the Fed decision. XAU/USD is around $1,730. 

EUR/USD is struggling to hold onto 1.13, showing relative resilience. European countries are working on plans to reopen borders and countries are discussing the fiscal stimulus plan. Eurozone industrial output figures are due out.

GBP/USD tumbled below 1.26 after topping 1.28, partially due to deadlocked Brexit talks and despite the announcement of intensifying talks on post-Brexit relations. Britain said it would not impose strict border checks in 2021, when the transition period expires, due to the struggles with coronavirus. 

UK Gross Domestic Product figures for April are forecast to show a plunge of over 18% in the first full month of a lockdown. The economy squeezed by 5.8% in March. The shuttering began late in the month.

See UK GDP Preview: A 20% plunge could serve as a third blow to sterling, three scenarios

USD/CAD has surged to 1.26 amid falling oil prices. WTI slipped below $36, reversing its gains related to the extended OPEC+ agreement. 

AUD/USD and NZD/USD have been among the biggest losers and despite their successes with the disease. Tensions between Australia and China persist over Canberra's demand to investigate Beijing's initial cover-up of COVID-19. 

Cryptocurrencies have exited their narrow ranges, falling to lower levels. Bitcoin is trading around $9,300.

More: Fed fallout: Back to risk-off mood? Explaining what went down and what's next

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.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

GBP/USD tumbles from the highest since 2018 on the Brexit impasse

The GBP/USD roller coaster continues with a downfall below 1.35 after the pair hit a 31-month high of 1.3539 earlier. Brexit talks have yet to yield an agreement. Negotiations are set to continue through the weekend.


EUR/USD battles 1.2150 after disappointing NFP

EUR/USD is trading off the 32-month highs amid bumps in US stimulus and vaccine distribution. Markets await the all-important US Nonfarm Payrolls missed expectations with 245K jobs gained in November. 


XAU/USD fails to break $1850 and turns to the downside

Gold peaked after the beginning of the American session at $1848/oz reaching the highest level since November 23 and then turned to the downside. It bottomed at $1829 and is it about to end the week hovering around $1830.

Gold news

Dollar downfall explained and what's next for markets

The safe-haven US dollar is hitting multi-month and multi-year lows against its peers while stocks are on fire. What is behind the risk-on rally? Valeria Bednarik, Joseph Trevisani, and Yohay Elam discuss markets' moving parts as 2020 nears its end.

Read more

Extra week of Black Friday!

Learn to trade with the best! Don't miss the most experienced traders and speakers in FXStreet Premium webinars. Also if you are a Premium member you can get real-time FXS Signals and receive daily market analysis with the best forex insights!

More info