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MTrading Team • 2023-07-31

GBPUSD struggles as US Dollar rebound joins pre-BoE, NFP anxiety

GBPUSD struggles as US Dollar rebound joins pre-BoE, NFP anxiety

Traders begin NFP week with mixed feelings as weekend headlines from Fed join China stimulus to help improve the sentiment, especially after Friday’s softer US inflation clues. However, mixed China PMI and cautious mood ahead of this week’s top-tier data/events join the month-end consolidation to restrict the moves amid early Monday.

With this, the US Dollar edges higher but the crude oil and gold price retreat whereas Antipodeans remain firmer. That said, NZDUSD rises the most on the upbeat NZ sentiment data and China stimulus news whereas AUDUSD comes in second place. That said, USDJPY also rises and becomes the third most gainer among the G10 currency pairs as BoJ announces surprise bond purchases while also cutting down inflation forecasts. It’s worth observing that the GBPUSD remains indecisive as traders prepare for a softer BoE rate hike amid mixed Fed concerns.

Elsewhere, BTCUSD and ETHUSD print mild gains but lack momentum amid looming fears of harsh crypto regulations.

Following are the latest moves of the key assets:

  • Brent oil retreats from 3.5-month high, down 0.30% intraday near $84.30 at the latest.
  • Gold price prints mild losses near $1,955 after posting the first weekly loss in four.
  • USD Index edges higher to 101.80 by the press time after rising to the three-week high in the last week.
  • Wall Street benchmarks closed with minor gains and helped the stocks in the Asia-Pacific zone to remain firmer. That said, equities in Europe and UK remain mildly bid of late.
  • BTCUSD and ETHUSD print minor gains around $29,400 and $1,860 respectively by the press time.
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NFP, BoE week begins with dicey markets

The key week comprising the top-tier US and Canadian employment data, ISM PMIs and the monetary policy announcements from the BoE begins with mixed feelings despite mostly upbeat news and statistics. That said, China’s official Manufacturing PMI improved but the Non-Manufacturing PMI eased. Further, Australian inflation clues came in mixed but the NZ business sentiment numbers came in firmer. Further, Japan’s industrial production rose in June but the retail trade figures failed to provide any clear directions.

That said, the Bank of Japan (BoJ) announced the first surprise bond-buying since February and conveyed hopes of easing inflation, which in turn defends the lose monetary policy and propels the USDJPY. However, the NZDUSD and AUDUSD are the biggest gainers while GBPUSD remains sidelined amid a cautious mood ahead of US data and BoE. Additionally, improvement in Germany’s Retail Sales and anxiety before Eurozone inflation and GDP prod the EURUSD bulls even as the US Dollar remains sluggish, mildly bid of late.

Talking about the cryptos, fears that a Senator in the US gains support for stiff regulations for BTCUSD and ETHUSD joins a cautious mood among the industry players to weigh on prices of these assets despite keeping them mild bid.

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

Eurozone data eyed

Given the lack of major data/events elsewhere, the first readings of Eurozone inflation and the Q2 GDP will entertain traders as ECB President Christine Lagarde expects a recovery in the bloc’s growth, as well as indirectly defends hawks. Additionally, the chatters about the Fed and the BoE, as well as China news, can offer extra directions to the momentum traders. Overall, the traders are likely to witness a sluggish start to the key week but the US Dollar’s recovery in the previous week may remain intact unless the EU data came in too strong, which is least expected.

May the trading luck be with you!