The sell-off in the US dollar across its main peers continued in Thursday’s Asian trading, as the Asian traders reacted to the dovish testimony by the Fed Chair Powell that more than confirmed Fed rate cuts are likely. Most majors kept their recovery momentum intact, with the Yen having emerged the strongest, followed by the Antipodeans. Gold prices also rallied towards the 1430 level, as Treasury yields extended the overnight declines.
The Aussie extended the bounce and moved closer towards the 0.70 handle amid upbeat Australian home loans data and renewed US-China trade jitters. Its OZ neighbor, the Kiwi traded 0.40% firmer near 0.6670 region, helped by higher oil prices. The USD/JPY pair, on the other hand, fell sharply and breached the 108.00 support area, despite the Asian equities cheering the resurgent Fed rate cut expectations. Meanwhile, both the EUR/USD and Cable extended the recent upside momentum but markets remained wary ahead of the European Central Bank (ECB) minutes and Bank of England (BOE) Chief Carney’s speech due later in the session ahead.
Main Topics in Asia
RBNZ Gov' Orr: Reserve bank embraces the future
Rumour: U.S. airstrikes are ready to start hitting Iranian targets in Syria
China and US differ over agricultural purchases US Pres. Trump boasted about – The New York Times
USTR announces initiation of Section 301 Investigation into France’s Digital Services Tax
Dow Jones: U.S. blacklisting of Huawei has become a stumbling block in trade talks
US Treasury Secretary Mnuchin urges US firms to seek Huawei exemptions – WSJ
China cautious over trade talks with the US - Global Times
China to introduce more measures to stabilize foreign trade - Xinhua
WTI clings to fresh 7-week high amid US-Iran tension, declining inventories
Gold surges to 8-day high on aftershocks of Powell’s Testimony, trade/political pessimism
Australian Home Loans data arrives above expectations, 0.0%
China won't introduce another "giant stimulus program" - SCMP
Asian stocks follow Wall Street higher despite US-China trade woes
Key Focus Ahead
We have a data-light EUR calendar for today, with the only German Final Consumer Price Index (CPI) data up for release at 0600 GMT. The final version is unlikely to have any major impact on the EUR markets, as they await the speech by the European Central Bank (ECB) Governing Council member Benoit Coeure (at 1015 GMT) and the central bank’s June meeting’s minutes (due at 1130 GMT) for fresh hints on a potential rate cut this month or the recent chatter on the restart of the QE program. Also, of note remains the Bank of England (BOE) Governor Carney’s speech (at 1000 GMT) at a press conference following the release of the central bank's Financial Stability Report (FSR) expected to be published at 0930 GMT.
The NA session is heavy with the Fedspeak, with the day 2 of Fed Chair Powell’s testimony closely eyed at 1400 GMT. Later in the session, the Fed officials Williams, Bostic, Barkin and Kashkari will be speaking and could have a significant impact on the dollar trades, as the US Consumer Price Index (CPI), due at 1230 GMT, is likely to come in mixed. At the same time, the US jobless claims and Canadian New Housing Price Index will be reported.
Markets will continue to keep a close watch on the US-China trade negotiation and UK political development.
EUR/USD rises above key hurdle ahead of ECB's minutes
EUR/USD is solidly bid while heading into the European session, courtesy of the dovish testimony by the US Federal Reserve President Jerome Powell. The pair may fall apart if ECB minutes hint at a rate cut.
GBP/USD: Road to recovery intact, eyes on UK politics, US CPI/ Fedspeak
GBP/USD buyers ignore the mixed bag of the UK data as dovish Fed led broad US dollar selling underpins heading into London open. UK politics, US CPI and day 2 of Fed Chair Powell’s testimony will be in the spotlight.
Powell's Power Play: Fed's five dollar downers – EUR/USD levels to watch
Fed Chair Powell has opened the door to rate cuts and weighed on the USD. EUR/USD has jumped from the lows and faces a new technical setup.
US inflation preview: FXStreet Surprise Index and Trend Indicators both point down – USD to fall?
The Fed Chair is "data-dependent" and the data speaks on Thursday – with the Consumer Price Index (CPI) report for June. FXStreet's Surprise Index is indicating a downside surprise. Recent inflation trends are also pointing to a negative outcome.
South Korea and Japan to hold trade talks on July 12th
Reuters reports that South Korea and Japan will hold trade talks on July 12th, in the face of the Japanese restrictions on tech materials exports to South Korea.
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.