Today's Forex: Dollar Gains Strength as Sentiment Declines Ahead of PMI Data
The euro gained strength after the European Central Bank (ECB) decided to raise its benchmark interest rates by 50 basis points, but it lost that bullish momentum early on Friday due to the downturn in risk sentiment. In the European session, the US Dollar Index rises toward 107.00, while US stock index futures are down between 0.3 and 0.8 percent. On Friday, S&P Global will publish the flash Manufacturing and Services PMI surveys for the US, UK, Germany, and the Eurozone. The Canadian economic docket will include data on May's retail sales.
The ECB also announced the Transmission Protection Instrument, a new anti-fragmentation instrument, in addition to the double-dose rate increase (TPI). The bank stopped providing forward guidance by stating that every meeting would be live and that they would consider the data before making a decision. ECB President Christine Lagarde withheld vital information about the TPI at the press briefing. A snap election will be held on September 25 due to Italian President Sergio Mattarella dissolving the parliament.
On Thursday, the EUR/USD lost some of its daily gains after moving toward 1.0300 and ended the day in the positive territory close to 1.0250. Early on Friday, the pair trades near 1.0200. Shunichi Suzuki, the finance minister of Japan, said on Friday that rising interest rates could hinder the nation's economic recovery, indicating support for the Bank of Japan's decision to maintain monetary stimulus despite a trend toward global tightening and increasing inflation.
On Thursday, gold finally took advantage of declining yields and climbed toward $1,720. On Friday, XAUUSD maintains a low activity level near that level and holds onto minor weekly gains.
After closing nearly unchanged the previous two days, Bitcoin is still ranging about $23,000. Following a 3.5 percent increase on Thursday, Ethereum advances toward $1,600 in the early hours of Friday.