Forex Today: US Dollar selloff pauses, eyes on Fedspeak, confidence data

Eren Sengezer FXStreet

Here is what you need to know on Friday, June 16:

The US Dollar (USD) suffered heavy losses against its major rivals on Thursday, with the US Dollar Index (DXY) touching its weakest level in over a month near 102.00. The DXY consolidates its weekly losses early Friday as investors await comments from Federal Reserve officials. The University of Michigan's preliminary Consumer Sentiment Survey for June will also be featured in the US economic docket. In the European session, Eurostat will release revisions to May inflation data.

The weekly Initial Jobless Claims in the US came in at 262,000 in the week ending June 10, surpassing the market expectation of 249,000. Other data from the US showed that Retail Sales rose 0.3% in May, while the Federal Reserve Bank of Philadelphia's Manufacturing Survey dropped to -13.7 in June from -10.4 in May. Mixed US data triggered another leg of USD selloff during the American trading hours on Thursday.

Meanwhile, the European Central Bank (ECB) announced on Thursday that it raised key rates by 25 basis points (bps) as expected. The ECB revised inflation projections for inflation excluding energy and food, especially for 2023 and 2024, citing past upward surprises and implications of robust labour market for speed of disinflation.

In the post-meeting news conference, "bearing a material change to our baseline, it is very likely the case that we will continue to raise rates in July," ECB President Christine Lagarde said. Revisions to inflation alongside Lagarde's hawkish tone provided a boost to the Euro and EUR/USD advanced to its highest level in over a month above 1.0950 before retreating below that level early Friday.

In the Asian session, the Bank of Japan (BoJ) left its monetary policy setting unchanged. Commenting on the policy outlook, "responding to an inflation undershoot after a premature rate hike is more difficult than responding to an overshoot," Bank of Japan Governor Kazuo Ueda said. USD/JPY gathered bullish momentum and was last seen gaining more than 0.5% on the day above 141.00.

GBP/USD capitalized on the broad USD weakness on Thursday and rose above 1.2800 for the first time since April 2022. In the European morning, the pair trades in a narrow range slightly above 1.2800.

Gold price rose sharply after falling to a three-month low below $1,930 on Thursday. Falling US Treasury bond yields provided a boost to XAU/USD and the pair snapped a four-day losing streak. Early Friday, Gold price continues to stretch higher and was last seen trading slightly above $1,960.

Following Wednesday's drop, Bitcoin gained nearly 2% on Thursday before settling at around $25,500 early Friday. Ethereum is struggling to gather recovery momentum and trading below $1,700 despite having registered small gains on Thursday.

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.

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