Forex Today: Risk flows dominate the scene

Valeria Bednarik FXStreet

What you need to take care of on Wednesday, June 1:

The day will start with Australia releasing the Q1 Gross Domestic Product and the May AIG Manufacturing PMI. Disappointing readings could unleash risk aversion after poor Chinese data released early Tuesday.

EU inflation soared to a record high of 8.1% YoY in May, according to preliminary estimates, further fueling concerns about the future of major economies. Asian and European stocks edged lower. Wall Street aimed to trim early losses but gave up ahead of the close and ended the day also in the red.

Meanwhile, EU representatives reached a deal over the sixth package of sanctions on Russia. They agreed to ban 90% of the country's oil imports by the end of the year. Charles Michel, president of the European Council, said the move would immediately hit 75% of Russian oil imports. The embargo covers petroleum and derivatives brought in by sea, allowing a temporary exemption for imports delivered by pipeline.

Sanctions also include an asset freeze and travel ban on individuals and excluding the Russian biggest bank, Sberbank, from the SWIFT system. Finally, leaders agreed to provide Ukraine with a €9 billion tranche of assistance to support the war-torn country's economy.

Crude oil prices soared at the start of the day but were sharply down during US trading hours. The black gold was affected by headlines indicating that OPEC members are considering exempting Russia from their oil production deal. WTI traded as high as $119.96 a barrel but settled at around $115.20.

Gold was unable to take advantage of the dismal mood and finished the day in the red below $1,840 a troy ounce.

Across the FX board, there was little change. The American dollar appreciated during the first half of the day but gave up during the US session. The EUR/USD pair trades around 1.0730, while GBP/USD stands around 1.2600.

The USD/JPY pair advanced alongside US Treasury yields, now trading at around 128.60, but USD/CHF saw little action and is currently at 0.9590.

The AUD/USD pair eased at the end of the day, posting modest losses as per trading in the 0.7170 price zone. The Canadian dollar appreciated alongside oil, with USD/CAD down to 1.2640.

Like this article? Help us with some feedback by answering this survey:

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

AUD/USD eyes 100-SMA hurdle near 0.7035 as hawkish RBA counters firmer USD

AUD/USD regains positive traction on Tuesday and climbs to 0.7030 during the Asian session, reversing the previous day's corrective slide from a one-month high as hawkish RBA rate expectations continue to support the Aussie. Spot prices, however, remain below the 100-day SMA pivotal resistance amid a firmer US Dollar as traders brace for Australia’s September CPI report on Wednesday ahead of the Fed rate decision.

USD/JPY sticks to modest gains above 157.50 as traders await Fed, BoJ meetings

USD/JPY attracts buyers for the third straight day, recovering further from a one-month low ahead of Wednesday’s FOMC decision and the BoJ policy update on Friday. Meanwhile, expectations that the BoJ may hold off on aggressive rate hikes weigh on the Japanese Yen, and the US Dollar advances to a nearly two-week high, supporting the currency pair.

Gold advances modestly past $4,000

Gold looks to consolidate Tuesday’s humble gains just above the key $4,000 mark per troy ounce. Indeed, the precious metal adds to Monday’s bounce despite the better tone in the US Dollar, mixed US Treasury yields and steady caution ahead of the FOMC event on Wednesday.

Pi Network stalls as weak crypto sentiment caps recovery

Pi Network (PI) holds steady above $0.0760 at press time on Tuesday, stalling after a roughly 2% rebound the previous day. The broader market's weak sentiment and reduced trading volume weigh on the PI token. The technical outlook is bearish, with price capped below a long-term resistance trendline and weak momentum.

France tests the Euro's nerve: What the OAT spread is telling FX traders

France's 10-year borrowing premium over Germany hit its widest since the 2011 debt crisis last week. With public spending above 57% of GDP, unrest on the streets and a presidential election next spring, cuts look unlikely. If Paris cannot trim, the bill may be paid quietly through financial repression.

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.