Daily Market Roundup: Dollar Dominates, Asian FX Weakens Amid Hawkish Fed Bets

The US Dollar surges to new 13-month highs, driving weakness across Asian currencies and commodities as hawkish Federal Reserve expectations firm.

Market Overview

Global markets are under pressure as a tech sell-off deepens and a firmer US Dollar impacts sentiment. The US Dollar Index (DXY) climbed to fresh 13-month highs, trading near 101.50, buoyed by aggressive Federal Reserve rate hike bets. Our Market Readiness Score (MRS) stands at 57, while the Carry Trade Score (CTS) is 81.

Major Currency Dynamics

• The British Pound extended its decline, falling below 1.3200, making it the weakest currency on an intraday basis according to our proprietary strength gauge, driven by concerns over political instability in the United Kingdom.
• In contrast, the Canadian Dollar topped our strength gauge intraday. That gauge is a short-term, session read: it sits against the day's broader USD-dominant narrative, which remains firmly intact on higher-for-longer Fed expectations.
• The Japanese Yen remained under pressure against the stronger Greenback, with USD/JPY narrowing its range around 161.60. AUD/JPY weakened below 112.00 amidst intervention fears, while EUR/JPY tested the bottom of a symmetric triangle near 183.50. InvestingLive noted that the Bank of Japan's June summary flag is rising towards 1.75%.
• The Euro reached a one-year low against the US Dollar, with EUR/USD targeting 1.1350 as the bullish USD momentum offset oversold RSI conditions.
• The Swiss Franc fell to seven-month lows ahead of expectations for the upcoming ZEW survey.
• The New Zealand Dollar weakened, impacted by the stronger US Dollar, Middle East risks, and firm US economic data.

Asia-Pacific Currencies & Data

Asian currencies generally weakened, with the Indian Rupee continuing its fall against the US Dollar as firm Fed expectations persisted. The Chinese Yuan also remained under pressure, as the People's Bank of China set the USD/CNY reference rate higher at 6.8195 from 6.8171 previously.

The Australian Dollar struggled near its April lows against the firmer US Dollar, with bears eyeing a breakdown of 0.6900. Australian Consumer Price Index (CPI) data showed mixed signals, with annual inflation cooling to 4.0% year-on-year in May, below the 4.3% forecast, even as the trimmed mean CPI month-on-month came in at 0.4%, slightly above the 0.3% forecast.

Commodities Update

• According to FXStreet, Gold appears vulnerable near a two-week low of $4,050, as Federal Reserve rate hike bets bolster the US Dollar. Gold prices in India also declined.
• Silver saw a new bearish leg, trading below $60 amidst aggressive Fed expectations.
• WTI crude oil traded around $72.50, recovering from three-month lows. It languished near March lows, staying above $72 as concerns over supply diminished.
• Qatar announced it would resume normal LNG production "in a few weeks" and foresees the reopening of the Strait of Hormuz, according to the Financial Times and InvestingLive.

Key Events Today

• AUD · CPI m/m: RELEASED actual -0.7% (forecast -0.4%, previous 0.4%)
• AUD · CPI y/y: RELEASED actual 4.0% (forecast 4.3%, previous 4.2%)
• AUD · Trimmed Mean CPI m/m: RELEASED actual 0.4% (forecast 0.3%, previous 0.3%)