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PRECIOUS-Gold slides as dollar rallies on steep Fed rate hike bets

“Success seems to be largely a matter of hanging on after others have let go.” – William Feather 

 

 

HEADLINES

 

 

  • Dollar climbs further, pinning euro, yen at multi-decade lows
  • PRECIOUS-Gold slides as dollar rallies on steep Fed rate hike bets
  • Oil prices fall ahead of potential large U.S. rate hike
  • UK stocks slide over 1% on U.S. inflation scare, weak earnings
  • Bond yields rise as yield curve inversion sends worrying recession signals
  • EUR/USD to target 0.96 on a sustained drop under parity – Scotiabank
  • AUDUSD Near Term: Downside favored

Dollar climbs further, pinning euro, yen at multi-decade lows 

The dollar resumed its relentless rise on Thursday, charting new 24-year highs against the yen and pinning the euro close to parity, as investors bet on the Federal Reserve ratcheting up interest rates to combat soaring inflation.

Global economic turmoil has put a rocket under the safe haven dollar, pushing the dollar index that tracks the greenback against six counterparts up more than 13% this year. It was last up 0.7% on the day at 108.71.

The dollar strengthened more than 1% against the yen, pushing it above 139 yen per dollar for the first time since 1998. It was last up 1.13% at 138.97 yen.

 

 

COMMODITIES

 

 

PRECIOUS-Gold slides as dollar rallies on steep Fed rate hike bets 

 

 

Gold prices shed more than 1% on Thursday, hovering near a one-year low, as the dollar extended its blistering rally after a hot U.S. inflation print cemented expectations around an aggressive Federal Reserve rate hike.

Gold, which pays no interest, tends to be pressured when interest rates rise as this increases the opportunity cost of holding bullion. “Gold is lower amid fresh attempts to send the dollar higher, especially against the yen while EUR/USD is holding above parity,” Saxo Bank analyst Ole Hansen said.

 

 

ENERGY

 

 

Oil prices fall ahead of potential large U.S. rate hike 

 

 

Oil prices moved lower on Thursday, paring some losses after falling more than $4 as investors focused on the prospect of a large U.S. rate hike later this month that could stem inflation but at the same time hit oil demand.

Brent crude futures for September fell by $1.18, or 1.2% to $98.39 a barrel by 1:50 p.m. EDT (1750 GMT) and were on track to finish a third session in a row below $100.

U.S. West Texas Intermediate crude for August delivery was at $95.02 a barrel, or 1.3% lower, down $1.28.

Both contracts hit lows on Thursday which were below the Feb. 23 close, the day before Russia invaded Ukraine, with Brent reaching its lowest level since Feb. 21.

 

 

STOCKS

 

 

UK stocks slide over 1% on U.S. inflation scare, weak earnings 

 

 

British stocks fell on Thursday as investors worried about the prospect of a more aggressive stance by major central banks to curb inflation, with a slew of worrying forecasts from companies and weak commodity prices also hurting sentiment.

The blue-chip FTSE 100 (.FTSE) slid 1.6%, while the domestically oriented FTSE 120 index (.FTMC) declined 1.2%.

Money markets are now pricing in a 72.8% likelihood of a 50 basis-point rate hike by the Bank of England in next month's meeting.

 

 

Bond yields rise as yield curve inversion sends worrying recession signals 

 

 

U.S. Treasury yields moved higher on Thursday as major bank earnings commenced and traders continued to digest the higher-than-expected 9.1% inflation print for June.

The 2-year Treasury yield, which is more sensitive to monetary policy changes than its longer-term counterparts, slipped 1 basis point to 3.132% after rising earlier in the session.

That’s created a wide gap, or inversion, between the 2-year and 10-year notes, which on Thursday notched another record dating back to 2000. Yield-curve inversions, or when shorter-term government bonds have higher yields than longer-term ones, are generally viewed by markets as harbingers of recession.

 

 

ANALYSIS

 

 

EUR/USD to target 0.96 on a sustained drop under parity – Scotiabank 

 

 

“Price action suggests it’s only a matter of time for a sustained move below 1.00, targeting the 0.96 figure zone as key support – with intermediate at mid/big-figure areas.”

“Resistance is 1.0050/60 followed by the 1.01 big figure and yesterday’s peak of 1.0122.”

 

 

CHART

 

 

AUDUSD Near Term: Downside favored

Technical View: Short position below 0.688. Target 0.67. Conversely, break above 0.688, to open 0.695.

Comments: The pair is expected to resume descend after correction.

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar



Footnotes
https://www.cnbc.com/2022/07/14/forex-markets-inflation-federal-reserve-recession-currencies-dollar-euro.html
https://www.reuters.com/article/global-precious/precious-gold-slides-as-dollar-rallies-on-steep-fed-rate-hike-bets-idUSL4N2YV24G
https://www.reuters.com/business/energy/oil-prices-tick-down-inflation-woes-take-centre-stage-2022-07-14/
https://www.reuters.com/world/uk/ftse-100-slips-after-us-inflation-scare-playtech-tumbles-2022-07-14/
https://www.cnbc.com/2022/07/14/bond-yields-rise-as-yield-curve-inversion-sends-worrying-signals-.html
https://www.fxstreet.com/news/eur-usd-to-target-096-on-a-sustained-drop-under-parity-scotiabank-202207141332
 

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