US Holiday joins a light calendar in the Asia-Pacific zone to restrict market moves early Thursday, especially when the traders take a breather after a volatile day. The US Dollar slumped the previous day after top-tier data challenged the US Federal Reserve’s (Fed) “higher for longer” rate bias. Also challenging the Greenback is the political uncertainty in the U, on speculations about US President Joe Biden’s exit from the race in the General Elections, as well as the downbeat Fed Minutes.
While the US Dollar was down, EURUSD better cheered hawkish comments from the European Central Bank (ECB) officials and ignored mixed data at home. Further, GBPUSD rose to a multi-day high amid a broadly weaker US Dollar and an upward revision of the UK Services PMI for June. It’s worth noting that both the top-tier currencies lack upside momentum early Thursday as the Greenback licks its wounds ahead of Friday’s US jobs report.
It’s worth noting that the USDJPY continued being an exception while rising to the highest level since 1986, before posting intraday losses today. That said, AUDUSD jumped to a six-month high and remains firmer so far despite downbeat Aussie trade numbers for May. Further, NZDUSD also remains firmer at the weekly high, up for the third consecutive day, as the New Zealand government cuts deficit forecasts for the first 11 months of the financial year.
USDCAD had double incentives for bears amid firmer Oil prices and downbeat US dollars, which in turn allowed the Loonie traders to ignore downbeat Canada trade numbers.
WTI Crude Oil reversed the mid-week pullback from a 2.5-month high on price-favoring inventory data and demand-supply matrix. Moving on, Gold price rose to the highest in a fortnight but lacks upside momentum of late as China woes challenge the bullion buyers despite a softer Greenback favoring further advances.
Alternatively, BTCUSD and ETHUSD both ignore the softer US Dollar while posting a three-day losing streak at the lowest level since May. It’s worth noting that the latest fall in the top-tier cryptocurrencies could be linked to a shift in the mining activities and the traders’ preparations for the spot ETH ETF launch.
Following are the latest moves of the key assets:
Be it the US ISM Services PMI or the ADP Employment Change, not to forget the Minutes of the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting, the US Dollar has all standing against it. The same joined the political woes surrounding Biden’s existence in the US elections to drown the US Dollar. With this, the US Dollar Index (DXY) dropped to the lowest level in three weeks during a five-day downtrend, lacking momentum around 105.30 by the press time.
On Thursday, the US ISM Services PMI dropped to the lowest level in nearly two years while slipping beneath the 50.0 level suggesting a contraction in the activities. Not only that, the ADP Employment Change, also known as the early signal for Friday’s US Nonfarm Payrolls (NFP), also weakened, while the Factory Orders for June marked a surprise fall. Furthermore, the Federal Reserve Bank of Atlanta’s GDPNow Model revised down the Q2 2024 GDP from 1.7% to 1.5%.
On the other hand, the Fed Minutes mentioned that the vast majority of participants assessed that growth in economic activity appeared to be gradually cooling. The Minutes also stated, “Most participants remarked that they viewed the current policy stance as restrictive.”
It’s worth noting that ECB officials challenged concerns about further interest rate cuts while the Eurozone PMI and PPI came in mixed, which in turn tested the EURUSD bulls. It should be noted that the downbeat prints of German Factory Orders also challenge the Euro buyers of late.
GBPUSD bulls flex muscles amid the US Dollar’s fall and hopes of less political chaos on widely anticipated Labour Party victory with the majority seats, more than 212, in the UK Parliamentary Elections. It’s worth noting that the Cable pair jumped to a multi-day high after posting the biggest daily gains in three weeks the previous day as the US statistics raised questions about the Federal Reserve’s (Fed) hawkish bias and drowned Greenback. That said, the Labour Party appears well-set to regain control after 14 years of sitting in opposition. The same could offer immediate strength to the Pound Sterling before challenging the bulls. The new government will have a tough task defending the economic transition and managing Brexit woes, especially amid the widening British deficit, downbeat macroeconomics and higher rates from the Bank of England (BoE).
USDJPY struggles to cheer the US Dollar’s weakness while making rounds to the highest level since 1986 as traders lack confidence in the Bank of Japan’s (BoJ) hawkish bias.
AUDUSD cheered the upbeat prints of Retail Sales and Building Permits to magnify the gains, especially amid disappointing US data, before today’s Aussie trade numbers tested the bulls. Further, the NZDUSD also edges higher as the New Zealand (NZ) Government forecasts a softer budget deficit 11 months into its financial year, down by 1.0 billion New Zealand Dollar (NZD) to 7.75 billion.
Moving on, USDCAD ignored downbeat Canada trade deficit figures amid the US Dollar’s slump and firmer prices of Crude Oil, mainly due to the inventory data. Per the US Energy Information Administration (EIA), the official Crude Oil weekly inventories marked the biggest draw in the stockpiles since early August 2023. The same joined early signs of higher US energy demand this summer and looming geopolitical woes challenging the supplies to keep the WTI crude oil buyers safe at the highest level of prices in 10 weeks. Additionally, Gold rose to a two-week high before lacking upside momentum as the US Dollar’s weakness jostled with fears about receding bullion demand from China.
Given the US holiday and a light calendar elsewhere, the traders may witness a lacklustre session. Also likely to challenge the momentum could be the cautious mood ahead of Friday’s US jobs report. It should, however, be noted that the existence of the ECB Monetary Policy Meeting Accounts, UK elections, and a light volume might trigger spikes in the prices of major currencies and commodities, especially in EURUSD and GBPUSD.
May the trading luck be with you!
