Friday, June 23: While crude oil and commodities fell, US stocks ended the day mixed. US Treasury yields increased at the same time. Markets took in rate increases from the Swiss National Bank and the Bank of England as well as Powell’s second day of evidence, in which he reiterated that interest rates were likely to climb higher.
Recent statistics releases in the US were conflicting. The week ending June 17 saw 264,000 new claims for unemployment benefits, which is the largest number since October 2021. On the plus side, continuing claims decreased to 1.759 million. In May, the Chicago Fed National Activity Index dropped from 0.14 to -0.15. The annual rate of existing home sales increased to 4.3 million.
After touching weekly lows below 102.00, the US Dollar Index slightly increased, but only enough to break a three-day losing streak and close close to 102.50. The yield on US 10-year Treasury bonds increased and eventually reached a high point for the week of 3.79%. The 2-year yield reached its highest closing level since March, 4.79%.
From monthly highs above 1.1000, the EUR/USD declined to the region of 1.0950. The pair lost bullish momentum, although the trend is still upward. The HICP PMI for the Eurozone will be made public on Friday. These figures will provide the first indication of the state of the economy in June.
In a 7-2 vote, the Bank of England increased interest rates by 50 basis points. The Pound declined despite the larger-than-expected increase. The announcement predicts future restrictions will increase. Concerns about the economy’s prospects and the possible effects of rate increases on activity are reflected in the decline of the pound sterling. On Friday, the UK is expected to release further economic statistics, including the June S&P Global PMI and the May Retail Sales. In a choppy session, GBP/USD finished lower, below 1.2750.
The USD/CHF exchange rate ended the day slightly higher, around 0.8950. The bearish bias in the pair’s sideways movement continues. The Swiss National Bank (SNB) increased its benchmark interest rate by 25 basis points to 1.75%, as anticipated.
The AUD/USD currency pair decreased and closed at 0.6750, its lowest level in a week. 0.6745/50 provides support for the pair. On Thursday, the Australian S&P Global PMI is expected.
The USD/JPY exchange rate surpassed 143.00 and recorded its best close since November. The divergence in monetary policy and rising government bond yields caused a general decline in the value of the Japanese Yen. Prior to the Jibun Bank PMI on Friday, the National Consumer Price Index is due in Japan. For predictions about when the Bank of Japan would end its ultra-accommodative monetary policy, the inflation statistics are essential. From 3.5% to 4.1% is predicted to be the annual rate increase.
