Forex Today: Recession fears keep leading the way

What you need to take care of on Thursday, July 7:

The dollar remained strong on Wednesday, with EUR/USD reaching a fresh 20-year low of 1.0160. The shared currency is among the weakest amid fears of a local recession and the looming energy crisis.

GBP/USD trades around 1.1930, under pressure as the UK Government crisis deepened. Over 30 officials resigned, while many others asked Prime Minister Boris Johnson to leave. The 1922 Committee of backbench Tory MPs is looking to change rules protecting PM Johnson from a second no-confidence vote.

The FOMC released the Minutes of its latest meeting. The document showed that Federal Reserve officials agreed high inflation warranted restrictive interest rates and are open to being even more restrictive if inflation persists. Also, the majority of participants saw a downside risk to growth, while judging there was a “significant risk” higher inflation could become entrenched. Somehow, the US Federal Reserve left the doors open for another 75 bps hike.

Wall Street spent the day struggling to post gains, but major indexes closed the day up. Despite hawkish FOMC Minutes, policymakers refrained from mentioning a 100 bps rate hike, despite pledging to do whatever was needed to tame inflation. Policymakers also refrained from speaking about recession.

The US Treasury yield curve remains inverted. The 10-year note currently yields 2.93%, while the 2-year note currently yields 2.97%. An inverted curve is usually seen as an early sign of recession.

Commodity-linked currencies were little changed against the greenback. AUD/USD trades around 0.6780 while USD/CAD hovers around 1.3040.

The USD/CHF reached a fresh monthly high of 0.9743, while the USD/JPY pair settled at 135.85.

Gold fell to a fresh 2022 low of $1,732.19 a troy ounce, trading nearby at the end of the day. Crude oil prices edged lower, with the barrel of WTI now at $98.40.