Daily Currency Update

USD - US Dollar

Yesterday, top central bankers issued a warning to investors, emphasizing that although policy rates have increased significantly in the past year, there is still further action required to alleviate inflationary pressures. The US dollar received a slight boost following Federal Reserve Chairman Powell's statement, in which he acknowledged the possibility of consecutive rate hikes. This statement contrasts with his recent remarks suggesting a more gradual approach to tightening. However, the insights provided by the leaders of the Federal Reserve, European Central Bank, Bank of England, and Bank of Japan yesterday did not significantly alter market expectations. Swaps pricing indicates an approximately 80% probability of a Fed rate hike in July and nearly 90% for the ECB, with a strong inclination towards further tightening by the ECB. Intraday trends today suggest that the USD's rebound is slowing down and may even reverse. US futures show positive movement, while crude oil prices are slightly weaker compared to the previous day. On the data front, we can expect the final reading of US Q1 GDP and PCE data at 8:30 AM ET, along with the weekly claims report. Additionally, Pending Home Sales data will be released at 10 AM ET.

CAD - Canadian Dollar

In a relatively calm trading session, the Canadian dollar (CAD) remains mostly unchanged. The US dollar (USD) is experiencing a mixed performance, slightly weaker throughout the day. The lack of significant movement in both stock markets and crude oil prices is not offering clear guidance, which may result in the CAD continuing to move sideways within the range of 1.32 in the mid to upper level today. Traders are keeping an eye on tomorrow's Canadian data releases, as well as the approaching long weekend. Modest gains in the USD can be attributed to slightly wider spreads. The estimated fundamental fair value for this morning stands at 1.3289 for the CAD. Observe the USD/CAD trends.

EUR - Euro

During overnight trading, the spot price of the euro (EUR) briefly fell below 1.09. However, opportunistic buyers intervened to prevent significant losses for the EUR, and the release of German regional Consumer Price Index (CPI) figures, which exceeded expectations, provided additional support and resulted in modest gains during the European trading session. All regional CPI data from Germany for June has surpassed forecasts, indicating a slight inclination towards an upside surprise in the preliminary German CPI report at 8:00 ET. If the German CPI report shows stronger numbers, it is likely that the EUR will experience further gains.

GBP - British Pound

After experiencing a decline and falling below 1.27 yesterday, the British pound (Sterling) is displaying indications of finding stability. Recent UK data revealed a decrease in consumer credit growth, but there was a slight increase in mortgage demand during May. However, existing mortgage holders chose to reduce their mortgage-related debt last month. It is noteworthy that in records dating back almost 20 years, consecutive net repayments have never been observed. At 12:30 ET, Bank of England (BoE) Monetary Policy Committee (MPC) member Tenreyro, known for her dovish stance, is scheduled to deliver a speech.