Commodities Plunge, USD Strengthens
01 July 2022
The US dollar traded slightly higher today, with the EURUSD pair staying below 1.05 and GBPUSD hovering at around 1.21, while USDJPY managed to stay above 135.
The USD has remained resilient despite the recent sharp decline in US yields, which brought the 2-year yield back below the key 3% level.
On Thursday, the Chicago PMI declined to 56.4 in June, down from 60.3 in May, getting closer to the 50.0 threshold, which is the line between contraction and expansion. In addition, a slower growth rate or outright contraction has been indicated by other manufacturing figures that have been released earlier.
EU data on schedule
Investors will be watching for indications of whether inflation has peaked in the CPI data for the Eurozone, which is coming later on Friday. After reaching 8.1% the previous month, the annual CPI for the euro area is predicted to increase to 8.4% in June, setting a new high.
Additionally, Eurozone manufacturing PMI statistics, particularly for Germany, the region's economic engine, are coming on Friday and are anticipated to reflect declining confidence in this crucial industry.
Elsewhere, commodities remain under pressure as fears of a global recession are mounting. Silver dived another 2.5% on Friday, falling below the psychological level of 20 USD for the first time in a year, while gold declined below the critical level of 1.800 USD. Additionally, copper was down more than 3% today, cratering to the lowest level since February 2021.
The Organization of Petroleum Exporting Countries and its partners adhered to their previously stated intention to boost production each month by 648,000 barrels per day in July and August but avoided debating policy after that point. Nevertheless, the WTI oil remains above its uptrend line, currently near 105 USD, but is down 10 USD from this week's highs above 115 USD.