Here is what you need to know on Friday, July 31:
The US dollar has been extending its sell-off, falling to multi-month or multi-year lows against major currencies. Historically low GDP, the Fed's readiness to do more, uncertainty about fiscal stimulus, and another rise COVID-19 deaths are in play. Additional US figures and end-of-month flows are eyed.
EUR/USD has flirted with 1.19 – the highest since June 2018 – GBP/USD is above 1.31, USD/JPY closer to 104, AUD/USD tops 0.72, and NZD/USD is above 0.67. The Canadian dollar is lagging with USD/CAD trading above 1.34 as oil prices are on the back foot.
The greenback's decline goes hand-in-hand with bond-yields. Benchmark ten-year treasury yields are at around 0.52%, close to the May trough. Gold is edging up once again, trading around $1,970.
US data: Gross Domestic Product plunged by 32.9% annualized in the second quarter. While it beat estimates, the historic fall weighed on the dollar. GDP was compounded by a worrying increase in continuing claims to above 17 million in the week ending July 17.
US GDP Analysis: Could have been worse, but will not improve, winners and losers in markets
Personal spending and personal income for June and the University of Michigan's final consumer sentiment figures for July are all lined up on Friday.
See Personal Income, Spending, and Prices June Preview: After all the agony just an average quarter?
US coronavirus cases have stabilized just under 70,000 while the daily death tolls continue rising, with the seven-day rolling average topping 1,200.
President Donald Trump floated the idea of postponing the elections due to the virus – seemingly in an attempt to divert attention from the GDP data – and triggered a backlash from rivals and from his own party.
Fiscal relief: Several programs including the $600/week federal top-up for the unemployed expire on Friday and lawmakers have yet to strike an agreement on the next steps. However, some of the participants are reporting progress in talks that are set to continue over the weekend.
Monetary support: Markets continue responding to the Federal Reserve's relatively downbeat message, committing to do more and acknowledging the deterioration in the economy.
EUR/USD's rise comes despite worse-than-expected German GDP – falling 10.1% in the second quarter. The French economy squeezed by 13.8% at the same time, better than estimated. Preliminary inflation figures from the old continent will likely remain depressed, with the headline hovering around 0% and core prices below 1%.
GBP/USD's surge comes despite the British government's surprising new restrictions in northwest England encompassing around 4.3 million people.
AUD/USD is also benefiting from the relatively robust Chinese Manufacturing Purchasing Managers' Index, which advanced to 51.1 points.
WTI oil prices dipped below $40 on Thursday but have recaptured the round level, weighing on the loonie. Canada publishes GDP figures for May, which are projected to show a rebound after crashing by 11.6% in April.
Cryptocurrencies have been consolidating their gains, with Bitcoin hovering around $11,000.
End-of-month flows may trigger more volatility than normal given the dollar's decline in recent weeks and especially in the past few days. Trading around 15:00 GMT could be considerably choppy.
More Where next for the dollar, stocks and the US economy after downbeat data and the Fed
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD holds above 0.6500 in thin trading
The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.
EUR/USD comfortable below 1.0800 lower lows at sight
The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.
Gold price finishes Thursday’s session set to reach new all-time highs
Gold price rallied during the North American session on Thursday and hit a new all-time high of $2,225 in the mid-North American session. Precious metal prices are trending higher even though US Treasury yields are advancing, underpinning the Greenback.
Google starts indexing Bitcoin addresses
Bitcoin address data is live on Google search results after users realized on Thursday that the tech giant started indexing Bitcoin blockchain data. However, mixed reactions have followed the tech giant's reversed stance on the cryptocurrency.
A Hollywood ending for fourth quarter GDP
The latest revisions put Q4 GDP at 3.4%, the second fastest quarterly growth rate in two years. Much of the upside was attributable to stronger consumer spending, yet fresh profits data affirmed it was a good quarter for the bottom line as well with profits up by the most since the Q2-2022.