What you need to take care of on Friday, September 9:
The greenback finished the day mixed across the FX board after a volatile day. The EUR/USD pair is little changed, just below parity after the European Central Bank hiked rates by 75 bps as expected.
The ECB upwardly revised the inflation projections to an average of 8.1% in 2022, 5.5% in 2023 and 2.3% in 2024. Policymakers also expect the economy to keep growing regardless of signs of recession, with the annual GDP seen up by 3.1% in 2022, 0.9% in 2023 and 1.9% in 2024.
The speech from President Christine Lagarde shed some light on future actions. She said it would take more than two meetings but less than five to get to the end of rate hikes, which is taking them to neutral levels. At the same time, she cooled down expectations of another 75 bps hike by saying it is not a norm but added that they could go for higher increases if needed.
US Federal Reserve Chief Jerome Powell delivered remarks on local inflation and monetary policy. Among other things, Powell said that the pandemic is the main reason behind the current situation, and repeated policymakers are strongly committed to bringing inflation down, as the longer it remains above target, the greater would be the risk.
As several other worldwide central bank leaders, Powell and Lagarde put taming inflation before stimulating growth. Lagarde diminished risks of recession but market players are well aware the energy crisis is yet to take its toll on the Union.
In the UK, the new Prime Minister Liz Truss announced a cap on household energy bills starting October 1. The government also announced it will put in place an equivalent cap for businesses' energy costs. The GBP/USD pair eased with the news, ending the day at around 1.1500.
The Canadian dollar surged against the greenback, with the pair trading at around 1.3090 as BOC officials reiterated more rate hikes are in the docket as inflation remains stubbornly high. AUD/USD trades little changed at around 0.6750.
The USD/CHF pair plunged, now trading at around 0.9700, while USD/JPY steadies at around 144.00.
Gold ended the day with losses at around $1,708 a troy ounce, while crude oil prices posted modest gains, with WTI ending the day at $83.25 a barrel.
US Treasury yields finished the day with modest gains. The 10-year note currently yields 3.29% not enough to trigger demand for the greenback but getting close to it.
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