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The U.S. dollar (USD) was resilient against its rivals early Thursday, with the U.S. dollar index holding a two-week high near 103.00 following Wednesday’s gains. During the European session, the European Commission will publish data on business and consumer confidence for June. Later in the day, inflation data from Germany and a final revision to first-quarter gross domestic product (GDP) growth from the U.S. Bureau of Labor Statistics, as well as weekly jobless claims data, will be closely watched by market participants.
Speaking at a policy group meeting of the ECB’s Central Bank Forum on Wednesday, FOMC Chairman Jerome Powell noted that they believe there will be more tightening, driven by a strong labor market. Speaking at an event in Spain earlier Thursday, Powell repeated his hawkish message and reminded markets that the vast majority of policymakers expect two or more rate hikes by the end of the year. Meanwhile, the Federal Reserve’s bank stress tests showed the ability of large U.S. banks to weather a severe recession and keep lending.
EUR/USD dipped below 1.0900 during Asian trading hours before staged a small recovery. Speaking on the same panel as Powell, ECB President Christine Lagarde reiterated that another rate hike in July was likely but avoided confirming any other policy steps later in the year. Meanwhile, Spain’s consumer price index rose at an annual rate of 1.9% in June, down sharply from the 3.2% increase recorded in May.
GBP/USD fell more than 100 pips on Wednesday and is within a hair’s breadth of 1.2600. The pair struggled to gain direction early Thursday.
USD/JPY climbed above 144.70, its highest level since November, during the European morning on Thursday, but lost more than 50 pips in the minutes following the jump. At press time, the pair is trading slightly below 144.50. During Friday’s Asian session, data on Tokyo’s consumer price index, industrial production and unemployment rate will feature prominently on Japan’s economic calendar.
Hawkish central bank comments continued to weigh on gold prices, with XAU/USD falling towards $1,900, hitting its lowest level since early March in the process.
Bitcoin fell 2% on Wednesday but managed to hold above $30,000. Ethereum approached $1,800 midweek before recovering to $1,850 on Thursday.
