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Markets Await US GDP Report

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USD

On Friday, the Greenback edged lower vs. its major rivals, as traders are awaiting the release of second-quarter growth data due later in the day. Meanwhile, investors expect the world's largest economy to grow by 2.6% in the second quarter, from 1.4% in the first quarter. Technically, positive figures will no doubt give the beleaguered USD some respite from the recent sell-off. However, U.S. core durable goods orders for June topped anticipations and surged by 6.5%, which reflecting a sharp jump in orders for transportation kits, but the U.S. dollar refused to hike vs. its major rivals on Friday. Among significant news, initial claims for state unemployment benefits rose by 10k to a seasonally adjusted 244k for the week ended 22nd July.

  • The U.S. dollar index (DXY), which measures the Greenback against a basket of currencies, fell as much as 0.15%, to settle at 93.780 pips, not far from yesterday’s 13-month low of 93.00.

EUR

The single currency held steady at $1.1691, after touching a two-year-and-a-half high of $1.1777 yesterday in spite of economic data coming out slightly weaker than expected. Consequently, this keeps the ECB tapering expectation in play. On the economic calendar for Friday, Euro is awaiting German Consumer Price Index, which measures the changes in the price of services and goods purchased by consumers and indicates the strength of domestic inflationary pressures could decline to 1.5% from 1.6%.

GBP

The British currency had a mixed day yesterday with the CBI realised sales index climbing to 22 from 12 instead of sliding to 10. The GfK consumer confidence index has slips from -10 to -12 instead of improving. No data is on tap for the UK economy today, so the currency will possibly be driven by Brexit updates and market sentiment.

JPY

The U.S. dollar fell as much as 0.3% vs. Japanese Yen to settle at ¥110.99, as Japanese economic data released today came in stronger than expected, with Japan’s core consumer prices, which includes oil products but excludes fresh food prices, rose 0.4% in June from a year earlier and still far below the BOJ's ambitious 2% target. In addition, Japanese household spending hit its highest for two years in June as unemployment declined and as job availability improved to a fresh 43-year peak.

Gold

Gold held steady on Friday, after hitting a more than six-week high in the previous session as investors are awaiting U.S. gross domestic product figures for the second quarter, which will be released Later in the day. Traders have to watch such figures closely as a recovery in the U.S. economy could give the beleaguered USD some support and respite it from the recent sell-off. In addition, a recovery in the world's biggest economy would encourage the Fed to hike interest rates, which may have a negative impact on gold, as it is highly sensitive to rising U.S. interest rates. The yellow metal was little changed at $1,257.55. 

Oil

Earlier today, despite falling prices, but oil still near 8-week highs, boosted by OPEC's efforts to limit production and a decline in U.S. inventories. Brent crude futures fell as much as 0.25% or 13 cents, to settle at $51.36, while U.S. West Texas Intermediate (WTI) crude futures were down 6 cents, or 0.12 percent, at $48.98. Technically, prices could hit new highs due to the potential U.S. sanctions on Venezuela's oil sector. In addition, investors need to watch U.S. rig count data for further signs of slowing drilling activity.

The most important economic events:

  • EUR German Consumer Price Index (YoY) (Jul P): (GMT 12:00) – Important – Forecast (1.5%) – Previous (1.6%).
  • USD Gross Domestic Product (Annualized) (2Q A): (GMT 12:30) – Important – Forecast (2.7%) – Previous (1.4%).

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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