This is what you need to know to trade today Thursday July 14:
Following Wednesday’s volatility, the DXY dollar index gained bullish momentum early on Thursday and has started to climb towards multi-decade highs above 108.50. Safe Haven Money Flows and Dovish Fed Expectations Fuel Dollar Recovery in the second half of the week, while the focus is on weekly data for the initial applications for unemployment benefits and the producer price index PPI. The European Commission will also publish its economic growth forecasts during European time.
On Wednesday, the US Bureau of Labor Statistics reported that inflation in the country, as measured by the consumer price index CPI, rose to 9.1% yoy in June from 8.6% in May. Although the dollar initially struggled to take advantage of good inflation data, the market’s appreciation of the Fed’s rate outlook buoyed the currency. According to the CME Group’s FedWatch tool, there are now a 75% chance that the Fed will raise its interest rate by a total of 175 basis points in the next two meetings.
the unexpected Bank of Canada’s decision to raise its interest rate by 100 points Commodities also appear to be raising expectations for a Fed rate hike. BoC Governor Tiff Macklem stated that “anticipating rate hikes now helps avoid the need to raise interest rates in the future“. Having fallen below 1.2950 in the American session on Wednesday, the USD/CAD rallied above 1.3000 early on Thursday. Later, Statistics Canada will release manufacturing sales data for May.
Meanwhile, the data from Australia showed that the unemployment rate fell to 3.5% in June, and the change in employment reached +88,400 in the same period. Both figures beat analysts’ estimates and the AUD/USD rose towards 0.6800 during the Asian session, before erasing its daily gains amid renewed dollar strength.
The EUR/USD advanced beyond 1.0100 in the second half on Wednesday, but retraced much of its daily bounce to close little changed near 1.0050. With the dollar retaining its strength early on Thursday, the pair turned down and started to slide towards the all-important parity.
The GBP/USD failed to gain recovery momentum and dipped below 1.1850 early on Thursday as the dollar’s valuation continued to weigh on the pair’s action.
The growing divergence of monetary policies between the Fed and the Bank of Japan continues to drive the USD/JPY. The pair is now trading at multi-decade highs near 139.00up 1% on the day.
The Prayed snapped a two-day losing streak on Wednesday as the 10-year US Treasury yield lost more than 1%. However, the broad dollar strength forced XAUUSD to reverse direction. At the time of writing it is testing $1,720.
The Bitcoin it rallied modestly on Wednesday, but as of early Thursday it is trading just over $20,000. The ethereum it was up more than 7% on Wednesday after testing $1,000 on Wednesday. ETH/USD remains lower in the European morning on Thursday, falling more than 1% towards $1,100.
Source: Fx Street

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