US Dollar recovery continues ahead of PMI reports

The US Dollar (USD) continues to benefit from risk aversion and gathers strength early Friday, with the US Dollar Index extending Thursday’s rebound toward 103.00. S&P Global will release the preliminary June Manufacturing and Services PMI surveys for Germany, the Eurozone, the UK and the US. Investors will also pay close attention to comments from central bank officials.

On Thursday, the Bank of England (BoE) surprised markets with a 50 basis points (bps) rate increase. The BoE reiterated in its policy statement that further tightening in the monetary policy will be required if price pressures proved to be more persistent. Although GBP/USD spiked above 1.2800 with the immediate reaction, it reversed its direction and closed the day in negative territory amid broad USD strength. In the European morning on Friday, the pair continues to edge lower toward 1.2700.

Similarly, the Swiss National Bank hiked its policy rate by 25 bps to 1.75%. In the post-meeting press conference, SNB Chairman Thomas Jordan said that they cannot rule out additional policy tightening. Following a short-lasting drop toward 0.8900, USD/CHF staged a rebound and registered small daily gain on Thursday. The pair preserves its recovery momentum and rises toward 0.9000 on Friday.

Reflecting the risk-averse market atmosphere, US stock index futures are down between 0.4% and 0.5% in the European morning. Meanwhile, the benchmark 10-year US Treasury bond yield consolidates weekly gains slightly below 3.8%. On the second day of his congressional testimony, FOMC Chairman Jerome Powell noted that it will be appropriate to raise rates one or two more times this year and added that they are not seeing any rate cuts anytime soon.

EUR/USD failed to stabilize above 1.1000 on Thursday and fell to the 1.0950 area during the American trading hours. The pair stays on the back foot and retreats toward 1.0900 in the early European session.

USD/JPY gained more than 100 pips on Thursday and advanced to its highest level since November near 143.50 during the Asian trading hours on Friday.

Pressured by rising US Treasury bond yields, Gold price suffered large losses and closed the fifth straight trading day in negative territory on Thursday. XAU/USD touched a three-month low at $1,910 early Friday before recovering modestly in the European morning.

Following Wednesday’s impressive rally, Bitcoin fluctuated in a tight channel above $30,000 on Thursday. BTC/USD holds steady near that level on Friday. Ethereum lost 1% on Thursday and closed slightly below $1,900. ETH/USD continues to move sideways in the European morning.