What you need to take care of on Friday, June 10:
The US dollar soared on Thursday as fears gripped financial markets. The catalyst was the European Central Bank, while Lagarde & Co. reaffirmed its commitment to raise rates in July, although it expected a move of 25 basis points. Investors were hoping for a 50 basis point hike amid inflationary pressures. She added that further hikes are likely in the near future, although the size of each increase depends on the outlook for inflation over the medium term.
In addition, the central bank revised the annual inflation forecast upwards, now estimated at 6.8% for this year, then down to 3.5% in 2023 and 2.1% in 2024. In contrast , growth has been reduced to 2.8% in 2022 and 2.1% for the next two years.
The EUR/USD pair has fallen, now trading near the 1.0600 price zone.
GBP/USD fell below 1.2500 hit by risk aversion, but with the pound also hurt by comments by British Prime Minister Boris Johnson, who said the kingdom was in a better position than in the past when the country faced economic difficulties, although he added that there was no quick solution to the situation in Ukraine, the one of the reasons for the mounting pressure on prices.
The Bank of Canada released a banking stress test, revealing that large banks would suffer huge financial losses but would remain resilient in the event of a large and long-lasting economic shock. The paper also showed that a tightening of monetary policy would test the resilience of the financial system and could exacerbate current financial vulnerabilities. USD/CAD is at 1.2700 after an intraday low of 1.2517. Lower crude oil prices weighed on the CAD as black gold stood at $121.10 a barrel.
AUD/USD gave way on Wall Street selling and ended the day just below the 0.7100 level. Gold weakened in rangeis currently trading at around $1.847 per troy ounce.
USD/CHF and USD/JPY edged higher on dollar strength and rising US government bond yields. The 10-year T note yielded as high as 3.073%, a multi-week high.
US indices closed in the red, with the Nasdaq Composite the worst performer, down 2.50%.
The focus will be on U.S. inflation on Friday, as the country releases the consumer price index for May, forecast flat at 8.3% year-on-year. However, the White House warned on Wednesday that the government expects inflation numbers to be “high.”
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