The US Dollar Index advanced to its highest level in more than five years above 103.00 early Thursday and is already up more than 2% on a weekly basis, boosted by risk-aversion and hawkish Fed expectations. Investors await Consumer Confidence and business sentiment data from the eurozone, the German inflation report and the first-quarter Gross Domestic Product (GDP) data from the US. Although the impressive gains witnessed in US stock index futures point to an improving market mood in the European morning, the greenback preserves its strength against its major rivals, especially the JPY.
As the European Union is preparing to respond to Russia’s decision to stop exporting gas to Poland and Bulgaria, Russian President Vladimir Putin said that the west’s plan to suffocate Russia’s economy had failed and reiterated that they will reach all of their objectives in Ukraine. Meanwhile, the Financial Times reported earlier in the day that energy companies in Germany, Austria, Hungary and Slovakia were planning to pay for Russian gas in roubles, which European Commission President Ursula von der Leyen said would be a breach of sanctions imposed against Russia.
EUR/USD plunged below 1.0500 for the first time since January 2017 in the early European morning on Thursday before staging a modest rebound.
The Bank of Japan (BOJ) announced on Thursday that it kept the monetary policy settings unchanged as widely expected. BOJ Governor Haruhiko Kuroda said that they need to continue the current powerful monetary easing in a patient way. “Western central banks are normalising their policy but Japan is not in such a situation given its economy and price trend,” Kuroda further noted, highlighting the policy divergence. In turn, USD/JPY was last seen trading at its highest level in more than 20 years at around 130.50, gaining 1.5% on a daily basis.
GBP/USD dipped below 1.2500 during the Asian trading hours on Thursday but managed to rebound modestly in the early European session. In the absence of high-tier macroeconomic data releases from the UK, the pair remains at the mercy of the dollar’s market valuation.
Gold turned south and closed deep in negative territory on Wednesday after having posted modest daily gains on Tuesday. XAU/USD extended its slide to a fresh 10-week low in the early Asian session before turning flat on the day near $1,885.
Bitcoin rose nearly 3% on Wednesday but continues to trade below the key $40,000 level. Ethereum fluctuates in a relatively tight range at around $2,900 early Thursday following Wednesday’s rebound.