Wednesday, June 21:
Amid a cautious market environment, the US dollar (USD) manages to maintain its position as investors await FOMC Chairman Jerome Powell’s testimony before the House Financial Services Committee. The economic calendar lacks any significant macroeconomic data releases, so market participants will be relying on comments from central bank officials for fresh market-moving triggers.
Reflecting the prevailing negative sentiment, both the Shanghai Composite and Hang Seng indexes experienced losses exceeding 1% on Wednesday. Furthermore, US stock index futures are trading in negative territory following the poor performance of major equity indexes on Tuesday. The US Dollar Index (DXY) is holding onto slight daily gains above 102.50 after closing higher for the past three trading days.
Strong inflation data from the UK contributes to increased demand for Pound Sterling during the early European morning on Wednesday. The Consumer Price Index (CPI), a measure of annual inflation, remained steady at 8.7% in May, surpassing the market’s expectation of 8.4%. Meanwhile, the Core CPI, which excludes volatile food and energy prices, increased by 7.1% in the same period, exceeding analysts’ estimate of 6.8%. Encouragingly, the Producer Price Index declined on a monthly basis. After initially rising above 1.2800, GBP/USD retreated slightly and stabilized above 1.2750.
For the second consecutive day on Wednesday, EUR/USD continues to trade within a narrow range above 1.0900. Later in the day, European Central Bank (ECB) policymakers Joachim Nagel, Isabelle Schnabel, and Fabio Panetta are scheduled to deliver speeches.
Following Tuesday’s decline, USD/JPY gained bullish momentum and is currently trading above 142.00. On Wednesday, the central bank Governor Kazuo Ueda reiterated the Bank of Japan’s (BoJ) commitment to maintaining an accommodative monetary policy in order to achieve the 2% price target and promote wage growth.
Gold prices suffered significant losses on Tuesday due to concerns over the potential negative impact of a slowdown in China on the demand outlook for the precious metal. As of early Wednesday, XAU/USD remains relatively stable below $1,940.
