Forex Today: Fed-fueled dollar defies yields and gains, gold, cryptos extend fall

Here is what you need to know on Friday, June 18:

The dollar has been extending its gains in a long reaction to the Fed, sending AUD/USD to new yearly lows. Cryptocurrencies extend falls and virus variant concern remain of worry. The BOJ left its rates unchanged as expected. 

Fed-effect: The US dollar has been extending its gains in response to the Federal Reserve's decision back on Wednesday. The bank signaled two rate hikes in 2023 and the opening of a discussion on reducing bond buys. Worries about rising inflation and forecasts for rapid job gains have fueled the Fed's shift. 

The greenback's advance comes despite gradually falling bond yields. Returns on US 10-year Treasuries has dropped toward 1.50%. Stock markets are below the highs, but far from crashing or suffering a "taper tantrum." 

Where next for markets after the Fed shocker

AUD/USD stands out with a drop toward 0.75, changing hands at the lowest since December and despite outstanding Australian labor figures released on Thursday. 

EUR/USD has recaptured 1.19 after dipping below that level. The old continent has extended its reopening. 

GBP/USD is struggling to hold onto 1.39, suffering also from a report that 11,000 COVID-19 cases were recorded on Thursday, the highest since mid-February. The Delta COVID-19 variant continues spreading quickly and vaccines are now offered to those 18 and older. UK Retail Sales disappointed with a drop of 1.4% in May. \

The Bank of Japan left its policy unchanged as expected, with the interest rate remaining at -0.10%. USD/JPY is hovering around 110. 

Gold has also been one of the victims of the Fed's sharp shift. XAU/USD dropped below $1,800 and fails to recover. 

Bitcoin is changing hands below $38,000, on the back foot once again. Ethereum dropped under $2,400. A major crypto mining hub in Sichuan has reportedly shut down. 

The economic calendar is relatively light, leaving room for further Fed speculation. 

See Are the Dollar’s FOMC Gains Sustainable?