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MTrading Team • 2023-07-28

EURUSD bears dominate as upbeat US GDP growth supersedes ECB rate hike

EURUSD bears dominate as upbeat US GDP growth supersedes ECB rate hike

Cautious optimism prevails on early Friday as market players anticipate a sooner end to the restrictive monetary policies at the top-tier central banks, especially after the previous day’s ECB move. Even so, strong US data joins the fresh fears of the US-China tussles to propel the US Dollar and prod the riskier assets, except for equities in the UK, Germany and Asian stocks.

Elsewhere, AUDUSD drops more than 1.0% to approach the monthly low whereas NZDUSD follows suit. That said, EURUSD also prints a three-day losing streak and braces for the first weekly loss in four ahead of German GDP, inflation and the US inflation clues.

USDJPY struggles to justify BoJ’s inaction as the policy statement suggests the board’s readiness for tweaking YCC policy and the yields rally.

It’s worth observing that prices of Gold and Crude oil remain mildly positive despite a firmer US Dollar whereas BTCUSD and ETHUSD stay pressured after pushing back the early-week optimism the previous day.

Following are the latest moves of the key assets:

  • Brent oil rises half a percent to $83.80 as it pokes three-month high peak of late.
  • Gold price prints mild gains near $1,950 after falling the most since early June the previous day.
  • USD Index refreshes three-week high near 102.00 as markets sense September Fed rate hike.
  • Wall Street benchmarks closed with minor losses but stocks in the Asia-Pacific zone edged lower. That said, equities in Europe and UK trade mixed of late.
  • BTCUSD and ETHUSD print minor losses around $29,100 and $1,860 after a slump to multi-day lows.
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AUDUSD drowns as US Dollar strength joins downbeat Aussie data

The EURUSD gains the market’s attention for having top-tier German and US data on the table for scheduling. However, the AUDUSD lures bears by marking the biggest daily slump, so far, in a month after Aussie Retail Sales and Q2 PPI came in downbeat and bolstered the dovish RBA view. That said, USDJPY fails to justify the BoJ’s inaction, despite the market’s fears of YCC tweak, amid broad US Dollar strength and firmer yields.

On a different page, equities stay firmer, edgy of late, as traders anticipate the sooner end of hawkish policies but the stronger US data allow the greenback to cheer Fed bets. Furthermore, cryptocurrencies bear the burden of the US policymakers’ push for harsh rules to regulate Bitcoin and Ethereum even if industry leaders unite against the move.

Gold ignores China fears and the US Dollar rally to pare the previous day’s losses while Oil prices remain firmer at the three-month high.

  • Strong buy: USDCAD
  • Strong sell: ETHUSD, GBPUSD, Gold
  • Buy: USD Index, Nasdaq, USDJPY

EU/US data and risk news in the spotlight

Germany’s first readings of Q2 GDP and July’s inflation data will precede the Fed’s preferred inflation gauge, namely the US Core PCE Price Index, for June to keep the EURUSD in the spotlight. Also important is the Canadian GDP and more details of the market’s reaction to the latest data and dovish central bank moves.

May the trading luck be with you!