Market Drivers – US Session – 21/06/2023

Cryptocurrencies rose sharply, with BTC/USD rising more than 5% above $30,400, the highest level in two months. Ethereum climbed towards $1,900. Crude oil prices rose more than 2% to the strongest level in two weeks. The WTI barrel surpassed $72.50

The US dollar dropped despite cautious market sentiment, amid a decline in US Treasury yields. The DXY dropped for the fourth consecutive day, despite Powell’s hawkish tone, ending slightly above 102.00

US stocks declined for their third session as central bankers continue to point to further tightening. The rebound from weekly lows faded late in the US session.

EUR/USD surged from 1.0900 to 1.0990, reaching monthly highs, with the Euro outperforming amid hawkish talk from European Central Bank members.


USD/CAD posted its lowest daily close since September 2022, around 1.3165. Data released on Wednesday showed Retail Sales rose 1.1% in April, above the expected 0.2%, and the New Housing Price Index in May climbed 0.1%, above the market consensus of 0%. The minutes of the latest Bank of Canada meeting showed no surprises. Members agreed that policy needed to be more restrictive, considering that the ‘economy remained clearly in excess demand’.


Key Developments

Fed Chair Powell delivered his semi-annual report to the House Committee on Financial Services. He repeated on Wednesday that higher interest rates are needed to bring inflation back to the target. His message was a copy-paste from the tone he delivered after last week’s FOMC meeting. Powell will speak again on Thursday before the Senate Banking Committee, but he should not bring anything new.


What To Watch

On Thursday, US Jobless Claims, the Chicago Fed National Activity Index, and Existing Home Sales data are due. Those figures will be relevant economic indicators, given that the next FOMC meeting is “live”.

On Thursday, the Bank of England will announce its decision on monetary policy. A 25 basis point rate hike is expected, however, UK inflation data raised the probability of a larger hike. The Pound spiked after inflation figures but then tumbled across the board. GBP/USD finished flat at 1.2760, helped by a weaker US dollar, while EUR/GBP surged from monthly lows at 0.8520 to 0.8600.

USD/MXN continues to trade near the 17.00 area, at multi-year lows, with a bearish bias. It found resistance at 17.25 on Wednesday and pulled back. The Bank of Mexico is expected to keep its key interest rate unchanged at 11.25% on Thursday.

Bank Indonesia is also expected to keep interest rates unchanged at 5.75%. The USD/IDR dropped on Wednesday after testing levels above 15,000

Also Read:

Gold pressured at key levels despite weakened US dollar

GBP/USD fluctuates in volatile session ahead of BoE’s decision

US stocks retreat for a third day on Powell’s testimony

Powell’s hawkishness is expected to support US dollar’s gains

Natural gas bounces on stalling US Dollar during Powell testimony

Fed’s Powell: Battle to bring down inflation still has ‘a long way to go’