Forex Today: Markets turn cautious ahead of US PMI data
|Here is what you need to know on Monday, August 1:
Despite the hot US inflation data, the greenback struggled to find demand on Friday and the US Dollar Index (DXY) ended up closing the second straight week in negative territory. The index stays relatively quiet below 106.00 on Monday as investors wait for the ISM to release the Manufacturing and Services PMI reports for July. The European economic docket will feature the Unemployment Rate for June. In the early trading hours of the Asian session on Tuesday, the Reserve Bank of Australia will announce its interest rate decision. Meanwhile, US stock index futures are down between 0.4% and 0.5%, pointing to a cautious market mood at the start of the week.
Earlier in the day, NBS Manufacturing PMI in China came in at 49, suggesting that the business activity in China's manufacturing sector contracted in July. The Non-Manufacturing PMI declined to 53.8 from 54.7 in June.
The data from the US showed that the Personal Consumption Expenditures (PCE) Price Index climbed to 6.8% on a yearly basis in June from 6.3% in May. The Core PCE Price Index, the Fed's preferred gauge of inflation, edged higher to 4.8% from 4.7% in the same period. The benchmark 10-year US Treasury bond yield, which lost nearly 4% last week, clings to modest daily gains early Monday, helping the dollar stay resilient against its rivals.
Despite the dollar's poor performance, EUR/USD struggled to gather bullish momentum and closed the previous week virtually unchanged a little above 1.0200. The pair continues to fluctuate above that level in the early European session. The data from Germany showed on Monday that Retail Sales contracted by 1.6% on a monthly basis in June, missing the market expectation for an increase of 0.2% by a wide margin.
GBP/USD rose more than 150 pips last week and managed to build on last week's gains at the beginning of the week. The pair was last seen trading in positive territory near 1.2200.
USD/JPY trades at its lowest level since mid-June and continues to push lower toward 132.00.
Following the previous week's impressive performance, gold seems to have gone into a consolidation phase. XAU/USD was last seen moving sideways above $1,760.
Bitcoin trades in negative territory near $23,200 after having registered modest losses over the weekend. Ethereum gained 5% last week and continues to stretch higher toward $1,700 in the European morning.
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