U.S. Review
Inflation Rising, Housing Not so Much
- Despite the acceleration in consumer prices, the Fed is unlikely to change its current course for a rate hike in the middle of next year.
- The housing recovery remains slow. Existing home sales perked up in June, while new home sales erased all of the gains made in May.
- Durable goods orders beat expectations and the factory sector looks to have improved further into July.
- The economy appears to have bounced back in the second quarter and should maintain growth just shy of 3 percent for the rest of the year.
Global Review
Global Economy Continues to Grow at Modest Pace
- Data released this week showed that real GDP growth in the United Kingdom remained above an annualized rate of 3 percent in the second quarter. Economic growth in the Eurozone, however, remains soft. It is difficult to envision a robust expansion if the French economy, which accounts for20 percent of Eurozone GDP, continues to struggle.
- The rate of real GDP growth in China has stabilized at around 7.5 percent in recent quarters, and the smattering of data that we have thus far in Q3 has also been encouraging.
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EUR/USD consolidates weekly gains above 1.1150
EUR/USD moves up and down in a narrow channel slightly above 1.1150 on Friday. In the absence of high-tier macroeconomic data releases, comments from central bank officials and the risk mood could drive the pair's action heading into the weekend.
GBP/USD stabilizes near 1.3300, looks to post strong weekly gains
GBP/USD trades modestly higher on the day near 1.3300, supported by the upbeat UK Retail Sales data for August. The pair remains on track to end the week, which featured Fed and BoE policy decisions, with strong gains.
Gold extends rally to new record-high above $2,610
Gold (XAU/USD) preserves its bullish momentum and trades at a new all-time high above $2,610 on Friday. Heightened expectations that global central banks will follow the Fed in easing policy and slashing rates lift XAU/USD.
Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap
SNB is expected to ease for third time; might cut by 50bps. RBA to hold rates but could turn less hawkish as CPI falls. After inaugural Fed cut, attention turns to PCE inflation.
Bank of Japan set to keep rates on hold after July’s hike shocked markets
The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session.
Moneta Markets review 2024: All you need to know
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