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Flight to safety continues at the beginning of the week

Here’s what you need to know on Monday, June 13:

Markets remain risk averse at the start of the week with the dollar capitalizing on safe haven flows. The US dollar index rises for the fourth day in a row and is nearing the multi-year high it set on May 13. The yield on US Treasury bonds 1.5% and 2.5%. The economic docket will feature no high-impact data releases and risk perception is likely to continue to drive market action.

On Friday, US data showed the consumer price index (CPI) jumped to a new multi-decade high of 8.6% annually in May. This footprint exceeded the market expectation of 8.3% and caused investors to seek refuge. The S&P 500 index lost almost 3% and closed the previous week at 3,900. Over the weekend, the Financial Times reported that 70% of experts surveyed believe the US economy will enter a recession next year.

US CPI reverses to new four-decade high in May, threatening GDP.

After spending the Asian session in a relatively tight channel, EUR/USD started to decline amid broad dollar strength in European morning. The pair was last seen losing 0.3% to a daily low of 1.0485.

GBP/USD fell to its lowest level since May 16 below 1.2250 on Monday. Data released by the UK Office for National Statistics revealed that the UK economy shrank 0.3% on a monthly basis in April, compared with the market expectation of a 0.2% expansion. Other data from the UK showed that manufacturing output and industrial production contracted by 1% and 0.6%, respectively, in the same period.

USD/JPY rose to its highest level in over 20 years above 135.00 during Asian trading hours on Monday. Japanese Chief Cabinet Secretary Matsuno said they were ready to take appropriate action on currency movements if necessary and triggered a downward correction in the pair. Similarly, Bank of Japan Governor Haruhiko Kuroda acknowledged that recent sharp falls in the yen exchange rate were neither desirable nor good for the economy. USD/JPY was last seen making modest daily gains at 134.75.

Prayed rose sharply on inflation fears on Friday night and closed the week at $1,870. With the benchmark 10-year US Treasury yield in positive territory, XAU/USD pulls back towards $1,860 on Monday.

Bitcoin it extended its slippage over the weekend and ended up losing more than 11% last week. BTC/USD remains on the defensive and was last seen testing $25,000, shedding nearly 5% on the day. Ethereal posted losses for the 10th week in a row and touched its weakest level since February near $1,300 on Monday.

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