Forex Today: Risk-aversion takes its toll

Here is what you need to know on Friday, June 19

The Bank of England was the main event of the day but failed to impress. Policymakers voted 8-1 in favour of expanding QE by  £100 billion to £745 billion as expected, leaving rates on hold at a record low of 0.1%. BOE’s Governor Andrew Bailey said that the decision on negative rate is not in any sense imminent. He also said that “evidence suggests economic downturn has not been as severe as in May scenario but let's not get carried away. The Pound initially rallied on the news, but the movement was quickly faded, with GBP/USD down to the 1.2410 area.

Fears about fresh coronavirus outbreaks were the second most relevant market mover. The number of cases in the US continues on the rise, particularly in the south. However, Germany and Portugal also reported an increase in new cases. Meanwhile, the epicentre of the pandemic is now the third world, with most cases in Latin America.  Global indexes fell amid renewed concerns about when and how the economies would recover.

US President Trump pledged to transform federal courts after the Supreme Court ruled against deporting immigrants that went to the US as children. The DACA program established by President Obama protects undocumented immigrants who were brought to the US as children from deportation and allows them to work legally in the country. “I will be releasing a new list of Conservative Supreme Court Justice nominees, which may include some, or many of those already on the list, by September 1, 2020,” Trump tweeted.

President Trump also said that “there’s a chance it was intentional,” referring to the coronavirus spread, somehow making China responsible.

The EUR/USD pair pierced the 1.1200 level during US trading hours on the back of risk aversion, settling not far above the mark. Commodity-linked currencies eased alongside equities.

Gold prices seesawed between gains and losses, but finished the day pretty much unchanged, with spot around $1,725 a troy ounce. Crude oil prices, on the other hand, edged firmly higher, with WTI settling around $39.00 a barrel. OPEC Ministers had a meeting and said that it was unlikely they will recommend an extension to the current output cuts from July into August.

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