Forex Today: US Dollar weakens despite Powell; BoE in focus after UK CPI

During the Asian session, New Zealand will report trade data and Credit Card Spending. The focus later will be on the Bank of England decision. The central banks of Switzerland, Turkey, Indonesia, and Mexico will also announce their monetary policy decisions. Fed Chair Powell will present testimony again. Jobless Claims and Existing Home Sales data are due in the US.

Here is what you need to know on Thursday, June 22:

US stocks declined for their third session as central bankers continue to point to further tightening. The rebound from weekly lows faded late in the American session.

Federal Reserve (Fed) Chair Powell delivered his semi-annual report to the House Committee on Financial Services. He repeated on Wednesday that higher interest rates are needed to bring inflation back to the target. His message was a copy-paste from the tone he delivered after last week's FOMC meeting. Powell will speak again on Thursday before the Senate Banking Committee, but he should not bring anything new. 

On Thursday, US Jobless Claims, the Chicago Fed National Activity Index, and Existing Home Sales data are due. Those figures will be relevant economic indicators, given that the next FOMC meeting is "live".

The US dollar dropped despite cautious market sentiment, amid a decline in US Treasury yields. The DXY dropped for the fourth consecutive day, despite Powell's hawkish tone, ending slightly above 102.00

On Thursday, the Bank of England will announce its decision on monetary policy. A 25 basis point rate hike is expected, however, UK inflation data raised the probability of a larger hike. The Pound spiked after inflation figures but then tumbled across the board. GBP/USD finished flat at 1.2760, helped by a weaker US dollar, while EUR/GBP surged from monthly lows at 0.8520 to 0.8600.

BoE Preview: Banks expect 25 bps, door open to further hikes

EUR/USD surged from 1.0900 to 1.0990, reaching monthly highs, with the Euro outperforming amid hawkish talk from European Central Bank members.

Antipodean currencies rose during the American session. The Kiwi outperformed, with AUD/NZD pulling back to 1.0940. NZD/USD rose above 0.6200, while AUD/USD tested levels above 0.6800. It will be a holiday in China on Thursday and Friday for the Dragon Boat Festival. New Zealand will report trade data and Credit Card Spending on Thursday.

USD/CHF erased three days of gains, falling toward 0.8900. The Swiss National Bank (SNB) is expected to raise rates by 25 basis points on Thursday. Chair Jordan will deliver a press conference.

SNB Preview: Two scenarios and their implications for EUR/CHF – Credit Suisse

USD/CAD posted its lowest daily close since September 2022, around 1.3165. Data released on Wednesday showed Retail Sales rose 1.1% in April, above the expected 0.2%, and the New Housing Price Index in May climbed 0.1%, above the market consensus of 0%. The minutes of the latest Bank of Canada meeting showed no surprises. Members agreed that policy needed to be more restrictive, considering that the 'economy remained clearly in excess demand'.

USD/MXN continues to trade near the 17.00 area, at multi-year lows, with a bearish bias. It found resistance at 17.25 on Wednesday and pulled back. The Bank of Mexico is expected to keep its key interest rate unchanged at 11.25% on Thursday.

Bank Indonesia is also expected to keep interest rates unchanged at 5.75%. The USD/IDR dropped on Wednesday after testing levels above 15,000

USD/TRY continued to trade steadily around 23.60 ahead of Thursday's Central Bank of the Republic of Turkey decision. The central bank is expected to raise interest rates sharply, by more than 1,000 basis points from the current 8.5%. Such a move would represent a change towards economic orthodoxy after a dramatic Lira depreciation and inflation hitting levels above 80.0%.

Cryptocurrencies rose sharply, with BTC/USD rising more than 5% above $30,000, the highest level in two months. Ethereum climbed towards $1,900.Crude oil prices rose more than 2% to the strongest level in two weeks. The WTI barrel surpassed $72.50