On Wednesday, July 1, here’s what you need to know:
Following the Federal Reserve’s surprise hawkish stance on June 16, the US dollar index rose to its highest level since it lifted off from 90.441.
DXY reached a high of 92.448, its highest level since April 8 of this year.
On Wednesday, a combination of solid US data, delta covid flows, hawkish Fed speakers, and expectations for a healthy Nonfarm Payrolls report on Friday helped the dollar retain its strong narrative in financial markets. Robert Kaplan of the Federal Reserve restated his hawkish attitude, saying, “I’d prefer to taper sooner than the end of the year.” This, combined with the fact that Private Payrolls grew steadily in June, placed the US dollar on course for its strongest month in four and a half years.
The EUR/USD exchange rate extended its losses below 1.1900, testing the June lows in the 1.1840 price range. The negative thesis will most likely gain traction below this level. On the other hand, a positive technical pattern has evolved, raising the likelihood of a big upside correction in the coming days, casting doubt on the optimistic US dollar narrative for the time being, at least from a technical standpoint; Here’s more on that: The strong US dollar narrative continues to push towards the US NFP, but Brexit fears over the Northern Ireland Protocol, nicknamed the sausage debate, keep the GBP/USD at 1.3830. The current grace period, which exempts British-made sausages and other chilled foods from customs checks, was set to expire on Wednesday. The spread of the Delta strain of COVID-19 in the UK is also causing concern for the pound. The government was forced to postpone its full reopening earlier this month due to the government shutdown.
USD/CAD continued to test bearish commitments through 1.2400 in the New York session, printing a high of 1.2421, recovering from the London sell-off. AUD/USD fell further to break the 0.7500 level, scoring a new low of 0.7491, while USD/CAD tested bearish commitments through 1.2400 again in the New York session, printing a high of 1.2421, recovering from the London sell-off.
Gold rebounded from two-month lows in the $1,750s, gaining more than 0.5 percent on the day, reaching a high of 41,774.45 before settling near $1,770 by the closing bell.
Crude oil prices jumped from near the day’s lows of $72.84 to about $73.51 by the close of trading on Wall Street, owing to a large draw on US stockpiles ahead of the highly anticipated OPEC+ meeting.
Traders will be looking at the Australian Trade Balance and Chinese Caixin Manufacturing PMI in the mid-Asian session before a flurry of EZ data later in the day.
Central bankers will talk in the European session before the penultimate set of US data in the US session, which includes Manufacturing PMI and Unemployment Claims, ahead of Friday’s highly anticipated US Nonfarm Payrolls./n
