Forex Today: Safe-haven flows dominate markets ahead of PMI data

Here is what you need to know on Friday, April 22:

Hawkish comments from central bankers allowed global yields to rise on Thursday and caused markets to turn risk-averse ahead of the weekend. The US Dollar Index, which dropped below 100 for the first time in a week on Thursday, made a sharp U-turn and closed in positive territory. Preliminary Manufacturing and Services PMI reports for the euro area, Germany, the UK and the US will be featured in the economic calendar on Friday. European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey will be delivering speeches later in the day as well.

Wall Street's main indexes closed deep in the red on Thursday and US stock index futures are posting small losses early Friday, reflecting the souring market mood. The benchmark 10-year US T-bond yield is up modestly after rising nearly 3% on Thursday.

While speaking at the IMF Spring Meetings on Thursday, FOMC Chairman Jerome Powell reiterated that they are planning to get interest rates "expeditiously" to neutral. Powell acknowledged that 50 basis points rate hikes will be on the table at the upcoming meetings and noted that the US labour market was still very tight.

EUR/USD climbed to its highest level in more than a week at 1.0937 early Thursday but erased all of its daily gains to close below 1.0850. Several ECB policymakers, including Vice President Luis de Guindos, voiced their willingness to hike the policy rate as early as July. President Christine Lagarde, however, refrained from adopting a similarly hawkish tone during her speech at the IMF event. The pair is moving sideways around mid-1.0800s early Friday.

GBP/USD turned south after rising toward 1.3100 on Thursday and was last seen trading at its weakest level since November 2020 near 1.2970. The data published by the UK's Office for National Statistics showed on Friday that Retail Sales in the UK fell by 1.4% on a monthly basis in March, missing the market expectation for a decrease of 0.3% by a wide margin. Commenting on the policy outlook, "we must not be complacent about inflation expectations," BOE Governor Bailey said on Thursday.

USD/JPY is trading in negative territory near 128.00 in the early European session. Earlier in the day, several news outlets reported earlier in the day that Japan’s Finance Minister Shunichi Suzuki and US Treasury Secretary Janet Yellen discussed a coordinated currency intervention during bilateral talks.

Gold managed to shake off the bearish pressure after dropping below $1,940 on Thursday and was last seen fluctuating in a tight range around $1,950. The risk-averse market environment could help the yellow metal hold its ground on Friday.

Bitcoin lost more than 2% on Thursday but continues to trade comfortably above $40,000. Ethereum fell 3% on Thursday and is testing the key $3,000 level early Friday.