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Federal Reserve Aftershock

FOREX

 


Dollar Firm as Powell's Testimony to Congress Looms

 


The dollar edged higher in early European trade Monday, keeping the positive tone generated last week by the Federal Reserve's hawkish turn, which saw it accelerate its timetable for raising interest rates.

 


EUR/JPY eyes 130.00 mark amid risk-aversion, eyes on ECB Lagarde speech

 


The EUR/JPY price continues to drift lower in the early European session. The pair opens at a higher level, albeit fizzles out rather quickly,  and refreshes the multi-month on Monday. The rapid selling action in the previous week erases previous two month gains in a matter of a few days.

 


Investors continue to digest the Fed hawkish outlook on inflation and interest rates. The central bank's sudden aggressive U-turn pushes the greenback higher against the majors. 

 


COMMODITIES

 


Gold prices claw back as U.S. Treasury yields retreat

 


Gold prices firmed on Monday, after posting a 6% drop last week, as a retreat in U.S. Treasury yields boosted the allure of the non-yielding metal.

 


Minneapolis Federal Reserve President Neel Kashkari said on Friday he wants to keep the U.S. central bank’s benchmark short-term interest rate near zero at least through the end of 2023 to allow the labor market to return to its pre-pandemic strength.

 


STOCKS

 


Stocks fall as hawkish Fed reverberates

 


Asian stocks dropped on Monday after last week's surprise hawkish shift by the U.S. Federal Reserve reduced the allure of riskier assets

 


Japan’s Nikkei led declines with a 3.6% drop and dipped below 28,000 for the first time in a month, while MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.4%. Chinese blue chips lost 0.7%.

 


BONDS

 


Hawkish Fed smashes reflation trades, yields; gold bounces amid risk-aversion

 


A risk-aversion wave has gripped the markets starting out a fresh week, as the Fed’s hawkish turn prompts dialing back of reflation bets while weighing heavily on the Treasury yields and equities.


The US returns on the market hit the lowest levels in four months, with the 30-year yields back below the 2% level. The US Treasury yield curve flattened after the Fed projected two interest-rate hikes by the end of 2023. 

 


CHART

 


EUR/USD - Weekly Candlesticks
  


Source: GKFX Metatrader 4 

 

EUR/USD appears to be forming a Head & Shoulders top pattern. The completion of the pattern would happen after the break of the rising neckline and implies a much steeper correction. - Prepared by Trading Writers*

 


CALENDAR

 


*Times in GMT

 


 
Source: FX Street Economic Calendar

 

Source

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/eur-jpy-eyes-13000-mark-amid-risk-aversion-eyes-on-ecb-lagarde-speech-202106210552
https://www.fxstreet.com/news/forex-today-hawkish-fed-smashes-reflation-trades-yields-gold-bounces-amid-risk-aversion-202106210550
https://www.investing.com/news/forex-news/dollar-firm-as-powells-testimony-to-congress-looms-2537115
https://www.investing.com/news/stock-market-news/asian-stocks-drop-as-fed-shift-reverberates-treasury-yields-slide-2537076
https://www.cnbc.com/2021/06/21/gold-markets-us-treasury-yields.html