Forex Today: EU and US inflation data to keep volatility high as Q2 comes to an end

Eren Sengezer FXStreet

Here is what you need to know on Friday, June 30:

June inflation data from the Eurozone and the Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred gauge of inflation, readings from the US will be watched closely by market participants ahead of the weekend. Since this Friday will be the last trading day of June and the second quarter, position adjustments later in the day could ramp up volatility and trigger wild fluctuations.

Eurozone Inflation Release: Mixed expectations should keep the Euro supported.

During the Asian trading hours, NBS Manufacturing PMI in China improved slightly to 49 in June from 48.8 in May. The Non-Manufacturing PMI edged lower to 53.2 from 54.5 in the same period but came in much higher than the market expectation of 50.8. Risk mood appears to be holding neutral in the European morning with US stock index futures trading virtually unchanged on the day. Meanwhile, the US Dollar Index consolidates weekly gains slightly below 103.50 and the benchmark 10-year US Treasury bond yield holds comfortably above 3.8% following Thursday's upsurge.

The US Bureau of Economic Analysis revised the annualized Gross Domestic Product (GDP) growth for the first quarter higher to 2% from 1.3% in the previous estimate. Additionally, weekly Initial Jobless Claims in the US declined sharply to 239,000 from 265,000. These upbeat data releases provided a boost to the US Dollar (USD) in the American session on Thursday.

On Thursday, Germany's Destatis reported that the annual Consumer Price Index (CPI) climbed to 6.4% in June from 6.1% in May. Although the Euro gathered strength against its rivals with the initial reaction to hot German inflation data, EUR/USD failed to keep its footing. Pressured by the broad USD strength, EUR/USD closed deep in negative territory and was last seen trading a few pips above 1.0850.

GBP/USD dropped below 1.2600 for the first time in two weeks on Thursday before staging a technical correction. Early Friday, the pair trades within a touching distance of 1.2600. The UK's Office for National Statistics reported earlier that the GDP grew at an annual rate of 0.2% in the first quarter, matching the previous estimate and the market expectation.

USD/JPY extended its rally to a fresh multi-month high above 145.00. The data from Japan revealed early Friday that the Tokyo Consumer Price Index rose 3.1% on a yearly basis in June, much lower than the market expectation of 3.8%. On a negative note, Industrial Production contracted 1.6% MoM in May.

Gold price fell sharply in the American session on Thursday and touched its lowest level since March at $1,893. Although XAU/USD managed to quickly erase those losses and stabilize above $1,900, it is finding it difficult to gain traction early Friday.

Bitcoin continues to fluctuate in its week-old range above $30,000. Following Wednesday's sharp decline, Ethereum registered small daily gains on Thursday. ETH/USD holds its ground and extends its recovery toward $1,900 early Friday.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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