With Wall Street’s main indexes suffering heavy losses on Wednesday, the greenback continued to gather strength against its major rivals in the second half of the day on Wednesday. Markets remain risk-averse early Thursday as investors wait for the European Central Bank (ECB) to publish the minutes of its April policy meeting. Later in the session, the weekly Jobless Claims and the Federal Reserve Bank of Philadelphia’s Manufacturing Survey will be featured in the US economic docket. Minneapolis Fed President Neel Kashkasi is scheduled to deliver a speech on inflation as well.
The S&P 500 Index lost more than 4% on Wednesday and the tech-heavy Nasdaq Composite Index fell 5%. In the European morning, US stock index futures are down between 0.1% and 0.3%. The benchmark 10-year US Treasury bond yield, which lost 3.5% on Wednesday, stays relatively quiet near 2.9% and the US Dollar Index is consolidating Wednesday’s gains near 103.80.
Global recession fears, the ongoing Russia-Ukraine crisis and major central banks’ willingness to tighten their monetary policies remain primary factors forcing investors to stay away from risk-sensitive assets.
EUR/USD erased the majority of Tuesday’s recovery gains and closed below 1.0500 on Wednesday. ECB policymaker Madis Muller said on Wednesday that he would support a 25 basis points rate hike in July and added that he wouldn’t be surprised if rates are raised past zero in 2022. On a more cautious tone, ECB Governing Council member Pablo Hernandez de Cos argued that the process of raising rates should be gradual given the uncertainty surrounding the outlook.
GBP/USD lost more than 150 pips on Wednesday and staged a modest rebound during the Asian session. Nevertheless, the pair returned to mid-1.2300s heading into the European session.
USD/JPY came under strong bearish pressure on Wednesday and extended its slide below 128.00 early Thursday. The data from Japan showed that Machinery Orders increased at a stronger pace than expected in March. On the other hand, Imports and Exports both rose less than expected on a yearly basis in April.
Gold dropped below $1,810 in the early American session on Wednesday but managed to regain its traction amid retreating US yields. After having closed flat, the pair stays relatively quiet near $1,815.
Bitcoin fell more than 5% on Wednesday and broke below the key $30,000 level as its performance remains strongly correlated with the US tech stocks. Ethereum lost 8% and registered its lowest daily close since July near $1,900. ETH/USD was last seen posting small recovery gains near $1,960.