Forex Daily Recap – Bond Yields Drop Beyond 2% as Powell Hinted a Rate Cut in July

USD Index

The Greenback continued to extend losses on Thursday’s trading session. At around 12:30 GMT, the USD Index found some support near 96.61 levels and took recovery path. The plunge came in after the Fed hinted of a rate cut by December 2019. Fed Chair Powell would likely exercise an “insurance cut” by July. Following the Fed announcement, the US 10-year Treasury Bond Yields dropped and moved below 2%.

On the events front, the US Jobless Claims figures reported lower-than-expectations, which allowed the Index to reverse trend today. The Continuing Jobless Claims computed since June 7 reported 1.662 million over 1.688 million forecasts. Meantime, the Greenback appeared to shrug over weak June Philadelphia Fed Manufacturing Survey data. This data reported merely 0.3 over 11.0 estimates. A few moments ago, reports suggested that Iran attacked a US military surveillance drone flying over the Strait of Hormuz. Trump confirmed the attacks and tweeted, “Iran made a very big mistake!”. The global conditions seem to grow worse and probabilities of war sets in risk-off sentiment.

USD/JPY

At around 16:51 GMT, the Ninja was 1.39% down reaching near 107.24 levels last touched on January 3. The BoJ decided to maintain an ultra-easy monetary policy and kept the short-term rates unchanged at -0.1%. However, the policymakers hinted to maintain the long term interest rates close to 0.0%.

Additionally, BOJ Governor Kuroda mentioned that the Bank would remain flexible over future easing options depending on the incoming data. Also, the Japanese Inflation figures have already missed the target of 2.0%. Despite that, JPY April All Industry Activity Index came out at 04:30 GMT. The consensus had estimated the Index to report near 0.7% in place of previous -0.3%. However, the actual reports recorded 0.2% higher than the market expectation.

USD/CHF

The pair continued to follow the tumble rally that initiated on June 19 at 1.0013 levels. The USD/CHF pair had made the opening today near 0.9925 levels. At 17:00 GMT, the pair was testing the 0.9792 support levels last touched on January 14. The Switzerland May Trade Balance reported 540 million higher than the market hopes of around 2,870 million. Meanwhile, the Greenback kept plunging following the Fed interest rate decision. As a result, the falling USD Index and the rising CHF kept the downtrend intact in the pair’s movements.

GBP/USD

After marking the day’s opening near 1.2654 levels, the Cable kept hold of the uptrend. The positive sentiment in the GBP/USD pair came mostly out of the Greenback slump. The UK Retail Sales reported mixed figures in the Asian session. The May MoM UK Retail Sales excluding Fuel came out -0.3% over -0.4% estimates. Anyhow, the YoY Retail data reported 0.4% lower than 2.7% forecasts. However, the gains remained limited near 1.2727 levels.

Meantime, Jeremy Hunt would compete with Boris Johnson after Michael Gove got eliminated in the latest ballot. In the middle of the day, BoE decided to keep the interest rates near 0.75%. Following the BoE rate announcement, the pair slipped from the day’s high reaching day’s low of 1.2674 levels.