Late Wednesday, the dollar’s rise continued. The US Dollar Index (DXY), which measures the greenback’s performance against a basket of six significant currencies, hit a new high of 99.77, its highest level in nearly two years. The DXY sees a downward correction ahead of the US weekly Initial Jobless Claims data and speeches by FOMC policymakers. Early Thursday, the market atmosphere remained optimistic, with US stock futures indices showing moderate gains. The European Central Bank’s (ECB) Meeting Accounts and February Retail Sales statistics will be featured on the European economic agenda.
According to minutes released on Wednesday, many participants at the Federal Reserve’s March policy meeting said they would have preferably wanted a 50 basis point rise in the target range for the federal funds rate. The newspaper also stated that the Fed intends to begin lowering its balance sheet following the May meeting. The 10-year US Treasury bond yield surged to its highest level since April 2019 at 2.66 per cent in response to the hawkish FOMC speech before falling below 2.6 per cent early Thursday.
Meanwhile, the United Kingdom has declared that it will freeze Sberbank’s assets and prohibit Russian coal imports. Furthermore, both the United States and the United Kingdom have stated that they will ban outward investments in Russia.
On Wednesday, the EUR/USD plummeted to 1.0874, its lowest level in a month, and finished the fifth day in a row in the red. The pair was last seen near 1.0900, where it was making tiny comeback gains.
GBP/USD fell below 1.3050 on Wednesday but recovered some of its weekly losses by early Thursday. Earlier, the pair was trading at 1.3100, up about 0.3 per cent on the day.
USD/JPY struggled to find traction despite rising US T-bond yields. In the European morning, the pair is trading in a relatively tight channel below 124.00. On Thursday, Asahi Noguchi, a member of the Bank of Japan’s (BOJ) policy board, said that “the positives of a weak yen on Japan’s economy outweigh the demerits.”
On Wednesday, gold remained surprisingly durable in the face of risk aversion, finishing the day practically flat at over $1,920. XAU/USD is trading in a range below $1,930.
Bitcoin dropped by more than 5% on Wednesday due to the Fed’s harsh tone. BTC/USD is trading below $44,000 on Thursday morning. Ethereum has already lost about 10% of its value this week, yet it remains above $3,000.