Thursday, June 22:
US stocks experienced their third consecutive decline as central bankers continued to signal the likelihood of further tightening. The earlier recovery from the week’s lows lost momentum in the later part of the American session.
Federal Reserve (Fed) Chair Powell presented his semi-annual report to the House Committee on Financial Services. He reiterated his stance from last week’s Federal Open Market Committee (FOMC) meeting, emphasizing the need for higher interest rates to address inflation concerns. Powell is scheduled to speak again before the Senate Banking Committee on Thursday, likely maintaining his previous statements.
Thursday will see the release of important economic data, including US Jobless Claims, the Chicago Fed National Activity Index, and Existing Home Sales figures. These indicators hold significance as the upcoming FOMC meeting is considered crucial.
Despite cautious market sentiment and declining US Treasury yields, the US dollar weakened. The DXY declined for the fourth consecutive day, even in the face of Powell’s hawkish tone, closing just above 102.00.
The Bank of England is set to announce its monetary policy decision on Thursday, with a 25 basis point rate hike anticipated. However, higher UK inflation data has raised the possibility of a larger increase. The Pound initially surged following the inflation figures but later experienced a broad-based decline. GBP/USD ended the day unchanged at 1.2760, benefiting from a weaker US dollar, while EUR/GBP rose from monthly lows at 0.8520 to 0.8600.
EUR/USD climbed from 1.0900 to 1.0990, reaching its highest point of the month. The Euro showed strength due to hawkish statements from members of the European Central Bank.
USD/CHF reversed three days of gains and approached 0.8900. The Swiss National Bank (SNB) is expected to raise rates by 25 basis points on Thursday, and Chair Jordan will hold a press conference.
Gold remained under pressure as it struggled to find a clear direction amid key short-term support levels. Market activity was subdued due to anticipation of central bank decisions, mixed signals regarding the Federal Reserve, and the holiday in China, limiting significant movements in XAU/USD price.
