The US dollar index remains strong after Powell’s testimony which supported a gradual increase in interest rates to come. The dollar pairs remain on the back foot, with the AUD/USD slumping back towards the lows after three days of losses.
The EUR/USD suffered heavy losses yesterday, pushing the pair below 1.1650 for the first time since the start of the month. The GBP/USD suffered the heaviest falls though, slumping over 1% for the week to date. The EUR/GBP is slipping back this morning, but the damage was done yesterday, with the pair shooting to 0.8900 yesterday, the highest level since March.
Meanwhile, the US dollar has made good ground against the Swiss Franc, pushing back above the parity line this morning as the dollar trumps the Swiss franc’s safe haven status.
The USD/CAD is also moving higher again after surging above 1.3200 yesterday.
The USD/JPY surged to new highs yesterday as the weakening yen met the resurgent US dollar, pushing the USD/JPY back above 113.00. Other yen pairs are mixed, with the AUD/JPY slumping this morning back towards 83.00.
The EUR/JPY rose above 131.50, but has slipped back below this morning. Meanwhile, the GBP/JPY is experiencing some follow on selling from yesterday’s reversal.
Gold has continued to slump, plunging below $1230 this morning.
This morning, we have UK inflation data, with CPI, PPI and HPI.
European final CPI is at 10.00.
US building permits are at 13.30, with housing starts at the same time.
US Fed chair Powell testifies at 15.00, with crude oil inventories at 15.30.
Gold has continued to weaken and with the resurgent US dollar, there could be further downside from here.