BOE and SNB rate decisions, mid-tier US data to ramp up volatility

The Swiss National Bank (SNB) and the Bank of England (BoE) will be the next major central banks to announce monetary policy decisions on Thursday. In the second half of the day, the weekly Initial Jobless Claims data from the US will be looked upon for fresh impetus. The US economic docket will also feature Chicago Fed’s National Activity Index and Existing Home Sales for May. FOMC Chairman Jerome Powell will speak on the policy outlook in the second day of his semi-annual congressional testimony. Finally, the European Commission will release the preliminary Consumer Confidence data for June.

On Wednesday, the US Dollar came under strong selling pressure during the American trading hours. The US Dollar Index (DXY) snapped a three-day winning streak and erased its weekly gains. The DXY stays relatively quiet, slightly above 102.00 early Thursday.

In his prepared remarks for delivery on the first day of the testimony, Powell reiterated that nearly all FOMC participants expect it will be appropriate to raise interest rates “somewhat further” by the end of the year. “We will continue to make our decisions meeting by meeting based on incoming data, implications for outlook and balance of risks,” Powell added. Following these comments, Wall Street’s main indexes turned south but the USD failed to capitalize on risk aversion. According to the CME Group FedWatch Tool, the probability of the Fed raising the policy rate by 25 basis points in July declined toward 70% from 77% ahead of Powell’s testimony.

GBP/USD fell below 1.2700 in the European session on Wednesday but staged a rebound later in the day. Early Thursday, the pair holds steady at around 1.2750. The BoE is widely expected to lift its policy rate to 4.75% from 4.5%. Since there will not be a press conference, investors will pay close attention to vote split and the language in the policy statement.

BoE Interest Rate Decision: Another 25 bps hike favored as UK inflation stays hot.

Following a three-day rebound, USD/CHF met resistance near 0.9000 and declined toward 0.8900 on Wednesday. The SNB if forecast to raise its key rate by 25 basis points to 1.75%.

EUR/USD gathered bullish momentum and climbed to its highest level since in over a month, above 1.0950. The pair continues to stretch higher toward 1.1000 early Thursday.

USD/JPY advanced to a fresh multi-month high near 142.50 on Wednesday but lost its traction in the late American session. The pair trades in a narrow channel below 142.00 early Thursday. Bank of Japan (BoJ) board member Asahi Noguchi argued that a weak Yen hurts households via rising prices but benefits firms via an increase in overseas profits and a rise in inbound tourism. Noguchi further added that the monetary policy does not directly target exchange rates.

Gold price fell to its weakest level in three months below $1,920 on Wednesday but managed to stage a rebound amid retreating US Treasury bond yields in the late American session. Nevertheless, XAU/USD is finding it difficult to hold its ground early Thursday, trading in negative territory slightly below $1,930.

Bitcoin climbed above $30,000 for the first time in two months on Thursday. At the time of press, BTC/USD was up nearly 1% on the day at $30,300. Ethereum gained more than 5% on Wednesday and extended its rally early Thursday ETH/USD is already up nearly 12% this week and was last seen trading above $1,900,