Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

The vast majority of retail client accounts lose money when trading CFDs.

You should consider whether you can afford to take the high risk of losing your money.

Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
ATFX

FCA License No: 760555

ATFX-search-icon
Client Portal
Start trading
rch

Gold & Dollar Index markets respond to hawkish FOMC Minutes

The precious metal gold fell to a new low on Wednesday following the release of the minutes of the FOMC meeting held last month, which sounded so hawkish. It allowed another 50 or 70 basis points interest rate hike in July. This caused a major panic in the forex market yesterday, leading investors to sell off their risky assets, especially XAUUSD, for less risky investments ahead of the anticipated interest rate hike in July. Gold was freely handed to the bears, driving the price to a low of $1732 recorded on Wednesday.

Gold is currently seeking a recovery during the Asian session today after losing over 800pips in less than 48hours, falling from $1812.20 to a new monthly low at $1732.30. The price is currently ranging at $1740. The relative strength index (RSI) shows that gold is in an oversold position and set for a short recovery. However, investors are anxiously awaiting the NFP report tomorrow to determine the next direction for gold.

How does the NFP report affect gold?

The Non-Farm Payroll (NFP) report, usually released every First Friday of the month, is an important economic data that measures the unemployment rate in the country. The unemployment rate is an essential financial data used to measure the strength of the US economy. An increase in the unemployment rate has a gross negative implication for the dollar index. This will favor gold and trigger its recovery. However, reducing unemployment will send gold to a deeper grave and strengthen the dollar.

FOMC Minutes remain hawkish as Dollar Index hits 20-year high

The dollar index (USDX) climbed to its highest level in twenty years on Wednesday after the Minutes of the Federal Open Market Committee (FOMC) meeting held from 14th-16th June turned out to be hawkish. The monetary policy committee reinstated commitments to fighting inflation at all costs. A further pledge was included to its readiness to consider another interest rate hike in July as long as inflation persists.

A further interest rate hike of either 50 or 70 basis points could be appropriate in July. This could revive tensions in the forex market and push the dollar index (USDX) to a new all-time high at 107.2, marking its highest level in twenty years. This massive rise in the dollar index had triggered a major selloff on other currencies paired with the US dollar, such as EURUSD, GBPUSD, NZDUSD, AUDUSD, etc. These sets of currency pairs having US dollars as their counter pairs were pushed to their lowest points over the decades. EURUSD attained a new low in over twenty years at $1.0139. GBPUSD printed a new low at $1.1875 before rising again to its current position at $1.19999 during the Asian session today. NZDUSD created a new low at 0.6123.

Conversely, currency pairs with the US dollar printed an all-time high in the market as their base currency. USDCAD carved out a new high on Wednesday at $1.3082; USDCHF formed a monthly high of $0.974; USDPLN printed a new high at $4.7101.

Prices are currently recovering again. However, investors are looking forward to the NFP report being released today, which will determine the next direction for the dollar index.

Last Updated: 08/07/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

Recent news

Recent news
Kiwi Dollar Could Return to a Safe Haven Play Versus Euro

The New Zealand dollar has lost ground against the euro recently after being a safe haven ...

Recent news
Canadian Dollar Seeks Further Gains from Economic Data

The US dollar has surged recently and registered significant gains against the Canadian do...

Recent news
Is The Global Stock Market Sell-off Over?

Stock markets made a bearish close on Friday, and under crucial support levels, it warned ...

Recent news
Crude Oil Receives Price Boost from OPEC+ Production Cut

The price of crude oil got a lift from the latest OPEC+ meeting, where a production cut wa...

Recent news
GBPAUD Offers Volatility Ahead of RBA Policy Meeting

The Reserve Bank of Australia meets for another policy meeting this week, and traders seek...