Forex today: Traders concentrated on the U.S. GDP beat ahead of the Fed, (Dollar climbed 0.2%)


  • U.S. GDP expanded at a 2.1% annualised pace in Q2, which exceeded the estimates of 1.8%.
  • U.S. 2-year treasury yields initially rose from 1.85% to 1.88%.
  • The Dollar Index climbed 0.2% higher to the 98 handle.

Markets on Friday concentrated on the U.S. Gross Domestic Product, (GDP), which beat expectations and supported the Greenback higher - Consequently, the DXY jumped to the 98 handle and closed up 0.2% on the day.

"U.S. GDP expanded at a 2.1% annualised pace in Q2, which exceeded the estimates of 1.8%. "The consumer and government spending propelled the economy in Q2; household consumption grew 4.3%, their best showing since late 2017 while government spending grew 5%, its fastest pace since mid-2009. That offset declines for business investment - likely hit by global-growth weakness and trade uncertainties – and weakness in residential investment, net trade and inventories," analysts at Westpac explained. 

U.S. 2-year treasury yields initially rose from 1.85% to 1.88% following the data and 10-year yields moved between 2.06% and 2.10% while markets price in 28bp of easing at the Federal Reserve this week. However, stock markets might have been mistaken to think that they are expecting a 50 basis point cut considering the record closing highs in the S&P 500 and Nasdaq. Instead, the Federal Reserve will need to tread carefully considering the strength of the consumer.

Meanwhile, GBP remained on the backfoot and printed a low of 1.2376 as Brexit continues to weigh on the Pound's outlook and the Dollar rallied 0.2%. The EUR dropped from 1.1145 to 1.1115 on dovish ECB expectations. USD/JPY clung to a 20 pip range between 108.60 and 108.80 as traders await the Federal Reserve outcome. AUD/USD dropped from 0.6950 to 0.6903  for a one-month low. and the Kiwi followed suit, dropping from 0.6660 to 0.6626. 

Key notes from Wall Street

Key events for the week ahead

It a big week for markets this week: US (31 July) - FOMC Rate Decision. Top-Tier US data (1, 2 Aug) - ISM Manufacturing (Jul) and Nonfarm Payrolls (Jul). Canada (31 Jul) - Industry-level GDP (May). UK (1 Aug) - Bank of England Rate Decision. Eurozone (31 Jul) July Inflation, HICP (y/y), Core CPI (y/y). Europe (30-31 Jul) Q2 GDP, Sweden (q/q), Eurozone (q/q). Australia (31 Jul) Q2 CPI Headline (q/q, y/y), Trimmed (q/q, y/y). (2 Aug), Retail Sales (Jun/Q2), Retail Sales (m/m), Real Retail (Q2, q/q). China (31 Jul, 1 Aug), PMIs (Jul), Official Caixin.

Trade talks:

"Negotiators for the U.S. and China will face off in Shanghai this coming week in yet another attempt to piece together a trade accord, amid considerably lowered expectations for the kind of sweeping deal that appeared within reach this spring. Modest wins might be obtainable, however.

People close to the talks say a major breakthrough is unlikely on points that led to negotiations breaking down in early May. That includes the U.S. insistence that China commit to legal changes to protect intellectual property and abandon state..." - Wall Street Journal.

 

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD slides from 1.18 amid risk-off mood, US data eyed

EUR/USD is trading under 1.18, falling as the US dollar benefits from the risk-off mood. Worries about covid, China's techlash and tensions ahead of the Fed are weighing on sentiment. US Durable Goods Orders are eyed.

EUR/USD News

GBP/USD retreats from 1.38 as the dollar gains ground

GBP/USD is trading below 1.38, as the safe-haven dollar gains ground across the board. Earlier, sterling benefited from the drop in British covid cases. 

GBP/USD News

Gold slips below $1,800 as USD lingers near highs

Gold prices loiter near the $1,800 mark for the past five trading sessions. The US dollar remains steady near the four-month high ahead of the Fed’s interest rate decision. The prices moved cautiously despite the general negative sentiments surrounding the greenback.

Gold News

Dogecoin to retest critical support before overcoming doubt

Dogecoin price thrilled investors after posting a 17% surge on July 26. Following the swing high, DOGE has wiped out most of those gains as it retraces.

Read more

FX: 10 things to watch this week

Taking a look at the economic calendar, it is set to be a busy week for the forex market. There’s a central bank rate decision, GDP, inflation and employment reports scheduled for release. A number of big tech companies have ...

Read more

Forex MAJORS

Cryptocurrencies

Signatures