USD: Markets hold their breath ahead of Biden-Trump debate – ING

FXStreet Insights Team FXStreet

Defensive positioning has largely dominated the currency market this week, and with the exception of an inflation-boosted Australian Dollar (AUD). The US Dollar (USD) is trading firmly against all of G10, FX strategist Francesco Pesole at ING notes.

US PCE and Biden-Trump debate shape the FX landscape

“In the emerging markets space, heavy jitters in carry MXN, BRL and ZAR are taking the biggest hit. On the contrary, a weaker Yen remains the biggest story in FX. Japanese authorities may let USD/JPY rise further before intervening, which can offer broader support to the Greenback into tomorrow’s core PCE event.”

“Today’s US calendar includes the hardly market-moving third release of first quarter GDP and PCE, while some focus will be on May durable goods orders (which are expected to decline) and jobless claims. Despite an expected contraction in initial claims last week, the surprise stickiness in continuing claims is a trend to watch.”

“The USD may stay generally supported today. We’ll be very interested to see if and how the USD reacts to tonight’s first TV debate between President Joe Biden and Donald Trump (02:00 BST). Our baseline assumption is that Trump is the most dollar-positive candidate due to protectionism pledges, geopolitical stance and plans for lower taxes.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD advaces beyond 1.3450 after BoE decision, US Q2 GDP

GBP/USD gains positive momentum on Thursday, surpassing 1.3450 and trading at fresh multi-week highs. The Bank of England decided to maintain the benchmark rate unchanged at 3.75%. The MPC voted 6-3 to keep rates on hold, with the 3 dissenters favoring a rate hike. US Q2 GDP missing expectations helped the pair advance, while renewed US Dollar weakness across the FX board pushed the pair further up ahead of the monthly close.

EUR/USD confortable around 1.1530, highest in six weeks

The EUR/USD pair trades around 1.1530 in the American session on Thursday, reaching fresh six-week highs. The US Dollar is in sell-off mode, with multiple factors weighing on the American currency. Not only did the Federal Reserve vote divided to keep rates on hold on Wednesday, creating doubts about a September hike, but US Q2 GDP missed expectations. A suspected JPY intervention adds pressure on the Greenback.

Gold recovers the $4,100 level as US Dollar weakens further

Gold trades just above $4,100 amid a US Dollar sell-off. The Greenback enjoyed some near-term demand following Wednesday's post-FOMC downfall, but was unable to retain its gains. The preliminary estimate of the US Q2 GDP showed the economy grew at an annual rate of 1.5%, missing the market's expectations of 2.1%.

Bank of Japan set to keep interest rates unchanged after suspected Yen intervention

Investors are turning their attention to the Bank of Japan’s monetary policy announcement on Friday, after the Japanese Yen staged a dramatic rebound during Thursday's American session. The move came amid growing speculation that Japanese authorities intervened in the foreign exchange market after USD/JPY tumbled from above 163.00 to below 158.00 within minutes.

Aave to sunset Sonic, Aptos, zkSync, Scroll reserves, affecting $98 million in supply

Aave is planning to sunset 75 low-activity reserves across its decentralized finance protocol as part of a broader effort to reduce operational, technical and economic risks across its network of deployments.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.