The US Dollar (USD) is showing its teeth again in the Asian session today, recording a strengthening against all major currencies of the G-10 group.
The Greenback's return to strength comes as traders are anxiously awaiting a series of speeches from the world's central bank bosses, especially Federal Reserve (Fed) Chairman Kevin Warsh, at a time when bets on a US interest rate hike are increasing.
Following the USD's rise, here are the current market statuses that you must know:
1. Gold & Silver Scream, US Dollar Becomes the Choice
Gold (XAU/USD): Gold prices fell 0.8% to around $3,975 per ounce. The market seems to be speculating that the Fed will act aggressively to raise borrowing costs, thus reducing the attractiveness of gold, which is a non-yielding asset.
Silver & Platinum: Also dragged into the red zone and recorded a decline.
US Dollar Index (DXY): Up slightly 0.1%, continuing its positive momentum after successfully recording a 0.6% increase in the previous quarter.
2. Japanese Yen Gets Worse
The Yen currency continued to wither and weakened another 0.1% to around 162.71 per dollar. This fall left the JPY stuck at a 40-year low recorded this week.
Two Big Tests Await Traders This Week
A 9 basis point jump in the US 10-year Treasury yield on Tuesday has provided a lifeline and solid support for the USD.
This week's markets will be tested by two high-impact events:
Central Bank Boss Speech Series: Fed Chairman Kevin Warsh and ECB President Christine Lagarde are scheduled to speak at the Sintra Forum in Europe tonight.
US Employment Data (NFP): The market will turn to the June Non-Farm Payrolls (NFP) report tomorrow night (Thursday) for a definitive indication of the direction of Fed policy.
Markets Start Betting on Fed Rate Hike as Early as July!
Surprisingly, traders in the fed funds market are now reportedly starting to increase their bets that the Fed may raise interest rates as early as July! An expectation that was previously considered impossible by the market.
This hawkish sentiment was strongly supported by US economic data on Tuesday which showed:
JOLTS (Job Offers) data: The number of jobless claims for May remained stable without much change, proving that labor demand in the US is still strong.
Consumer Confidence: The consumer confidence index for June rose due to the fall in gasoline prices, thus alleviating people's concerns about the job market.
Conclusion for Traders: The combination of strong US economic data and the expected strong speech by Kevin Warsh tonight continues to fuel the USD's attack on gold and other major currencies. As long as tomorrow night's jobs data doesn't disappoint, the path for the USD to continue dominating the market looks pretty bright.
Do you think Kevin Warsh's speech tonight will have a 'rocket' or 'dive' impact on your USD pair? Take good care of your Money Management (MM)!
