What to watch for on Friday, July 15:
Recession fears kept the dollar on a bullish path during the first half of the day, although cooling expectations of a 100 basis point rate hike in the US triggered a corrective decline.
Federal Reserve Governor Christopher Waller said markets may have gotten ahead of themselves in pricing in a 100 basis point rate hike in July, adding that a 75 basis point hike would lead them to neutral. CME FedWatch now shows a 52% chance of a 75 basis point rate hike in July.
Global indices tumbled earlier in the day, though Waller’s words helped Wall Street trim most of its intraday losses. As a result, high-yielding currencies recovered some of the ground lost against the dollar.
The EUR/USD pair fell to 0.9951 but ended the day around 1.0020. The turmoil in Europe added to the weakness of the common currency. Gazprom, the Russian energy giant, said it will not guarantee the resumption of operation of the Nord Stream 1 gas pipeline after it is closed for repairs. German Economy Minister Robert Habeck said uncertainty over gas supplies “considerably clouded the economic outlook for the second half of the year.” In addition, the Italian Prime Minister, Mario Draghi, announced his resignation.
The GBP/USD pair fell to 1.1759, its lowest since March 2020, and is now trading around 1.1820. The political noise in the United Kingdom, after the Prime Minister announced his resignation and the Tories began an electoral process, weighed on the pound.
The USD/CAD pair rose to 1.3223, weighed down by equities and falling oil prices, but fell back towards the 1.3100 area. A barrel of WTI was quoted at $90.53 a barrel, and is now around $96.30.
The AUD/USD pair pulled back slightly and traded at 0.6750, despite encouraging employment data from Australia.
Gold hit a new 2022 low of $1,697.56 a troy ounce, and is now hovering around $1,710.
Source: Fx Street
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