Forex Today: Dollar at risk of falling further

What you need to take care of on Friday, August 5:

The dollar fell against most of its major rivals, ending the day near its recent lows, usually a sign of further declines ahead in the near term.

Fears of a global recession returned after the Bank of England announced its latest decision on monetary policy. The central bank hiked rates by 50 bps to 1.75% as expected. But policymakers upwardly revised their inflation forecast while anticipating a recession in the next five quarters. Among other things, Governor Andrew Bailey said that while he understands that raising interest rates will cause financial pain to many, "the alternative is even worse."

Federal Reserve official Loretta Mester stated that recession risks have increased in the US, adding that supply issues are likely to persist for some time. Finally, she said that interest rates should continue to rise at least through this year and the first half of 2023.

The GBP/USD pair plunged to 1.2064 but recovered 100 pips ahead of the daily close. EUR/USD benefited from the broad dollar’s weakness and settled around 1.0250.

AUD/USD advanced and hovers around 0.6970, helped by gold, as the bright metal reached fresh one-month highs in the $1,790 price zone. The USD/CAD pair edged higher and settled at 1.2860, as the CAD was hammered by falling oil prices. The barrel of WTI currently trades at $88.40 a barrel.

Finally, USD/CHF is down to 0.9550, while USD/JPY declined to 132.80.

On Friday, the focus will be on US employment figures. The country will release the Nonfarm Payrolls report, expected to show the country added 250K new jobs in July. The unemployment rate is expected to remain steady at 3.6%.

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