Forex Today: Markets shrug off Chinese concerns, top-tier US data awaited

Yohay Elam FXStreet

Here is what you need to know on Wednesday, August 4:

Markets are cautiously optimistic despite the spread of coronavirus in China and the ongoing techlash. ADP Nonfarm Payrolls, the ISM Services PMI and a speech by the Fed Vice-Chair stand out. NZD/USD is on the rise while cryptocurrencies are under pressure.

China is facing its worst COVID-19 spread since the disease originated in it back in late 2019. Worries about significant lockdowns somewhat weighed on Asian stocks but S&P 500 futures remain positive. Investors in the region are also worried about Beijing's ongoing persecution of large tech firms, with the current ire focused on the gaming sector.

On the other hand, the Caixin Services Purchasing Managers' Index (PMI) beat estimates with 54.9 points, showing growth expectations remain robust.

The dollar is relatively stable across the board, with NZD/USD standing out with a rise of 0.5% after reporting an increase of 1% in employment and a drop of the unemployment rate to 4%.

ADP's private-sector jobs report is projected to show an increase of around 695,000 in July, similar to 692,000 reported in June. While the figures are not always well-correlated to the official Nonfarm Payrolls figure, it tends to rock markets.

US ADP Employment Change July Preview: Jobs gains in service sector to slowdown

The second significant publication is the ISM Services PMI, which is forecast to remain stable above 60, but could disappoint like the Manufacturing PMI. The Employment component is of high importance, serving as a hint toward Friday's jobs report.

ISM Services PMI Preview: Business psychology begins to deteriorate

Federal Reserve Vice-Chair Richard Clarida is set to speak later in the day, and he could provide hints about how close the bank is to tapering its bond-buying scheme. Last week, the Fed seemed to be in no rush to act.

Bitcoin has been extending its gradual slide, dipping below $38,000, while Ethereum is hovering around $2,500 amid the upcoming change in the way Ether conducts transactions.

Three reasons why Bitcoin can suddenly explode to a new $50K-$65K range

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.