Forex Today: Panic recedes but the dollar remains strong

What you need to take care of on Wednesday, July 6:

Fears of a globalized recession take their toll on financial markets. The greenback took advantage of the risk-averse scenario and soared. The risk of a US recession is above 70%, according to analysts.

The EUR/USD pair fell to a 20-year low of 1.0234, recovering some ground later in the day but settling below the 1.0300 threshold. EU growth slowed to a 16-month low, while Germany struggles to get gas amid mounting tensions with Russia.

German Economy Minister Robert Habeck noted that the energy industry crisis could have a negative impact on financial markets. He did not rule out intervening gas prices. Since Russia curbed its gas flows to the country, Germany fears a complete blackout of Moscow’s provision, as  Russia will temporarily shut down the NordStream-1 pipeline on July 11 for annual maintenance. The country moved to alert level two in June and may soon move over intervening energy markets.

Eurozone money markets now expect the European Central Bank to hike rates by 130 bps by year-end.

The GBP/USD pair currently traded as low as 1.1897, now hovering around 1.1950. Turmoil in Downing Street will likely take its toll on the Pound as two senior cabinet ministers resigned, Sajid Javid and Rishi Sunak, quickly followed by vice-chair of the UK Conservative Party, Bim Afolami, Parliamentary Private Secretary Saqib Bhatti, and Parliamentary Private Secretary to Secretary of State for N. Ireland Jonathan Gullis.

The resignations came as Johnson kept former Conservative party whip Chris Pincher in his post after sexual misconduct allegations were made against him. The count may not be over yet, and Prime Minister Boris Johnson is working on replacing them all.  

Meanwhile, and with a global energy crisis, the Norwegian oil and gas association reported offshore workers began a strike on Tuesday in demand of wage hikes. It means an estimated 341K barrels lost on output per day. Crude oil prices edged lower amid risk-off flows, with WTI now trading at around $99.60 a barrel. US coal prices, on the other hand, reached all-time highs.

 Gold Price plummeted to a fresh 2020 low of $1,764.99 a troy ounce, now trading a couple of bucks above such a low.

USD/CAD trades at 1.3030 after peaking at 1.3083, while AUD/USD nears 0.6800 after bottoming at 0.6760. The late recoveries are related to Wall Street, as US indexes trimmed a good part of their intraday losses ahead of the close.