Daily summary

The dollar index - which measures the U.S. dollar's strength against a basket of six influential currencies such as the euro, recovered from the early session's lows. The dollar index dropped during the late North American session following a surprising move by the rating agency Fitch's downgrade of the US credit rating to AA+ from AAA. Fundamentally the king dollar is expected to be extra volatile in the rest of the week due to a busy economic calendar and all eyes remain on Friday’s US NFP data.

Immediately after the Reserve Bank of Australia decided to keep its target for the official cash rate (OCR) at 4.10%, the AUDUSD tumbled and held on to its sharp losses to currently trade around the 0.6630 handle. However, they did mention that further tightening may still be required to bring inflation back to target.

Markets turned wildly volatile from yesterday's North American session. Today the market participants and investors are now turning their eyes to the release of the US Personal Consumption Expenditures (PCE) price index data after the positive US preliminary GDP, the weekly Jobless Claims and Durable Goods Orders data increases the likelihood of more interest rate hikes by the Federal Reserve (Fed).

EURUSD rebounded back to above 1.1130 ahead of the ECB meeting outcome. European Central Bank is widely expected to follow US Federal Reserve in raising interest rates by 25 basis points today. However, investors should closely monitor ECB President Christine Lagarde’s speech to seek more details about the future monetary policy because Inflation in the euro area remains too high.

Today’s US Federal Reserve meeting outcome and Jerome Powell's speech will be closely watched around the world. Market fully pricing in and expect a 25bps interest rate hike for the eleventh time since March 2022 and we do believe this will be the case today.