What to watch for on Friday, July 8:
Financial markets were calmer on Thursday as risk aversion ground to a halt, limiting dollar strength. Global indices closed higher, although US Treasury yields soared as attention remained on recession prospects.
The EUR/USD pair fell to a new 20-year low at 1.0143, pressured by weak German data and the June meeting figures from the European Center. The Governing Council agreed that he needed to preserve his credibility by “showing his resolve”. Some members still wanted to keep the door open for a higher rate hike at the July meeting, although President Christine Lagarde said on multiple occasions that the rate hike would be 25 basis points.
GBP/USD settled at 1.2020, helped by the resignation of Prime Minister Boris Johnson. After two days of political turmoil, Johnson finally resigned as leader of the Conservative Party. He will remain in his post until September, when a replacement will be announced.
Commodity-linked currencies gained against the dollar, helped by the positive tone in equities. AUD/USD is trading around 0.6840, while USD/CAD is down as low as 1.2970.
Crude oil prices rose, albeit modestly. A barrel of WTI is trading at $102.60 a barrel. The price of gas in the United States soared after the publication of the EIA stock report.
The dollar advanced against the Swiss franc, with the pair now trading at 0.9740. The USD/JPY pair remained within known levels, now trading at 136.00.
In general, concerns about inflation and slowing economic growth remained the main driver of the market. There is no change in the pessimistic outlook, and risk aversion may return soon.
On Friday, the focus will be on the US Non-Farm Payrolls report.
Source: Fx Street
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