Forex Today: Speculative interest more concerned than policymakers

Valeria Bednarik FXStreet

What you need to take care of on Friday, September 9:

The greenback finished the day mixed across the FX board after a volatile day. The EUR/USD pair is little changed, just below parity after the European Central Bank hiked rates by 75 bps as expected.

The ECB upwardly revised the inflation projections to an average of 8.1% in 2022, 5.5% in 2023 and 2.3% in 2024. Policymakers also expect the economy to keep growing regardless of signs of recession, with the annual GDP seen up by 3.1% in 2022, 0.9% in 2023 and 1.9% in 2024.

The speech from President Christine Lagarde shed some light on future actions. She said it would take more than two meetings but less than five to get to the end of rate hikes, which is taking them to neutral levels. At the same time, she cooled down expectations of another 75 bps hike by saying it is not a norm but added that they could go for higher increases if needed.

US Federal Reserve Chief Jerome Powell delivered remarks on local inflation and monetary policy. Among other things, Powell said that the pandemic is the main reason behind the current situation, and repeated policymakers are strongly committed to bringing inflation down, as the longer it remains above target, the greater would be the risk.

As several other worldwide central bank leaders, Powell and Lagarde put taming inflation before stimulating growth. Lagarde diminished risks of recession but market players are well aware the energy crisis is yet to take its toll on the Union.

In the UK, the new Prime Minister Liz Truss announced a cap on household energy bills starting October 1. The government also announced it will put in place an equivalent cap for businesses' energy costs. The GBP/USD pair eased with the news, ending the day at around 1.1500.

The Canadian dollar surged against the greenback, with the pair trading at around 1.3090 as BOC officials reiterated more rate hikes are in the docket as inflation remains stubbornly high. AUD/USD trades little changed at around 0.6750.

The USD/CHF pair plunged, now trading at around 0.9700, while USD/JPY steadies at around 144.00.

Gold ended the day with losses at around $1,708 a troy ounce, while crude oil prices posted modest gains, with WTI ending the day at $83.25 a barrel.

US Treasury yields finished the day with modest gains. The 10-year note currently yields 3.29% not enough to trigger demand for the greenback but getting close to it.

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Shakeouts, Fakeouts, Hopes & Dreams pt.3

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 sits at three-week highs above 0.7000 on hawkish RBA-speak

AUD/USD holds a positive bias for the fourth straight day, trading above 0.7000 in the Asian session on Wednesday and at three-week highs. RBA Deputy Governor Andrew Hauser's hawkish remarks and inflation concerns underpin the pair. However, the upside appears capped as the US Dollar attracts some buyers amid looming US-Iran uncertainty.

USD/JPY remains confined in a familiar range below 158.50

USD/JPY sees some dip-buying in the Asian session on Wednesday, though it remains confined within a multi-week range near 158.50 as the uncertainty over the timing of the next BoJ rate hike keeps Japanese Yen bulls on the defensive. Meanwhile, hawkish Fed expectations, bolstered by inflation risks stemming from volatile oil prices, underpin the US Dollar. However, looming intervention fears could limit JPY losses and cap the currency pair.

Gold Price Forecast: XAU/USD hits lows near $4,110 as yields, Oil pick up

Gold (XAU/USD) extends losses for the fourth consecutive day on Wednesday as a moderate pick up on US Treasury yields and higher Oil prices support a mild US Dollar (USD) recovery from Tuesday’s lows.

Bitcoin eyes a break above $85,000 as institutional demand returns

Bitcoin edges higher above $83,000, extending its rebound from the 50-day EMA near $80,786. US-listed BTC spot ETFs recorded over $23 million in net inflows on Tuesday, following Monday's $526 million, signaling a return of institutional demand.

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

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.

The US Dollar fell. Gold didn't rally. That tells you everything

Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.