USD gains, gold slides $145 as Fed hawks push US 2-year yields up 12 bps

The dollar strengthened across the board in North American trade as Federal Reserve officials delivered an unusually hawkish set of remarks. Fed's Warsh described price stability numbers as 'more concerning,' Hammack argued it is time to act with rate hikes and warned that waiting will create pain, while Goolsbee agreed inflation is the Fed's primary issue. The rates market responded aggressively: US 2-year yields surged 12 basis points to 4.34% and 10-year yields rose 5.4 basis points to 4.73%, driving USD/JPY, EUR/USD and GBP/USD in the dollar's favour. Gold collapsed $145 to $4,455 as higher real yields undermined the non-yielding metal. Supporting data included final University of Michigan sentiment at 51.7 versus 51.0 expected, while Canadian Q2 GDP grew 3.3% annualised, marginally below the 3.4% consensus, capping CAD gains against a firm dollar. Non-farm payroll benchmark revisions trimmed employment by 79,000 jobs, a smaller downgrade than feared. With rate hike risk now being priced, dollar dips are likely to be bought unless upcoming inflation prints soften materially.