Forex Market Update: Key Data and Currency Trends
A relatively quiet day in the forex markets, with limited impactful data being released. Here’s a brief overview of the latest market activity and key points to watch:
Recent Data
Japan Inflation: This morning, Japan’s June inflation data ticked in at 2.8% year-on-year, in line with expectations and last month’s figure. This rise, which was mainly due to higher energy and food prices, continues to raise expectations of potential policy action at the Bank of Japan.
UK Retail Sales: UK retail sales for June last week posted a sharp decline of 1.2% MoM against a consensus expectation of -0.4%. This very disappointing data has exerted downward pressure on the GBP.
ECB Interest Rate Decision: On 18 July, the European Central Bank chose to keep interest rates intact at 4.25%, in line with market expectations. The ECB further iterated that tight control over inflationary pressures needs to be kept through possible changes in the September meeting.
Key Economic Data for Today
- Eurozone Consumer Confidence Flash (JUL): The Consumer Confidence Flash for the Eurozone is scheduled for release at 3:00 PM. The previous reading was -14.0, with the consensus at -13.2. This data will provide insights into consumer sentiment in the Eurozone.
- US Existing Home Sales JUN: Existing Home Sales is due 3:00 PM. The consensus is 3.99M. The forecast provided is 4.25M. A positive surprise could support the USD.
- US API Crude Oil Stock Change: The report will be released 9:30 PM. This previous data showed a huge draw of -4.44M barrels. The oil market traders will be keeping a close watch on this data.
Major Currency Pairs
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EUR/USD: The Euro has held its ground fairly well against the USD. Consumer Confidence data from the Eurozone should not highly influence this pair ahead of more significant releases this week.
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GBP/USD: The British Pound still is under pressure from an overnight poor retail sales report. Recent market sentiment, along with upcoming UK economic releases, will drive price action.
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USD/JPY: The yen keeps its mixed behaviour. Investors were on high alert to any hint that may come from the Bank of Japan, suggesting possible changes in policy.
Commodity Prices
- Oil: The price of US crude still remains in bearish territory. The API Crude Oil Stock Change data, due to be released later today, will set further direction. Traders are cautious, as more economic data and geopolitical events are needed to decide the future demand.
- Gold: Prices of gold lingered near record highs in hopes of a Fed rate cut in September. The safe-haven instrument seems to be the most favoured instrument among investors with rising global economic uncertainties.
Political and Economic News
US Federal Reserve Commentary: Fed officials’ recent comments have indicated care over interest rate cuts. Additional evidence is needed before major policy decisions can be taken, said Fed’s Barkin and Mester, joining the calls. How this development pans out will set the future course of monetary policy, investors are watching very closely.
Geopolitical Tensions: Investors are also watching geopolitical tensions, especially energy markets, that may impact global market stability and investment decisions. The discussions regarding energy security and disruptions to supply chains remain key to concerns that influence market sentiment.