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Abstract:The US Dollar uptrend may extend after resistance was taken out on US GDP, Alphabet and Twitter earnings propelled the S&P 500 higher. GBP/USD is vulnerable to the latest Brexit woes.
Asia Pacific Market Open Talking Points
USD may extend uptrend after 2Q US GDP beat after clearing resistance
Alphabet and Twitter earnings propel S&P 500 as markets await the Fed
British Pound fell, UK PM Boris Johnson wants Irish backstop removed
Not sure where the US Dollar is heading next? Check out the third quarter US Dollar fundamental and technical forecast!
The US Dollar outperformed against most of its major counterparts on Friday, propelled by better-than-expected second quarter US GDP data. GDP clocked in at 2.1% q/q versus 1.8% anticipated and from 3.1% prior. Personal consumption, which accounts for the vast majority of growth, rose 4.3% versus 4.0% expected and from 1.1% in the first quarter.
Local government bond yields rallied on the data and by the end of Friday, odds of a third Fed rate cut by year-end weakened. Yet, this was not enough to sour sentiment ahead of this weeks monetary policy announcement. The S&P 500 ended the day about 0.75% to the upside, particularly propelled by communication services.
This was thanks to gains in Alphabet (+10.45%) and Twitter (+8.92%) shares after solid earnings reports. Alphabet Inc., the parent company of Google, saw sales estimates beat expectations as their stock rose by the most since 2015. Meanwhile, Twitter saw better-than-expected revenue that caused their stock to increase by the most since April.
USD gains undermined the Australian and New Zealand Dollars, which were trading lower after a dose of risk aversion during Fridays APAC session. The British Pound also underperformed on Brexit woes. Newly appointed UK Prime Minister Boris Johnson told French President Emmanuel Macron that the Irish backstop, a sticking point in withdrawal negotiations, “must be removed” from the divorce deal.
Fridays Asia Pacific Trading Session
A lack of critical economic event risk at the beginning of a loaded week places the focus for FX on risk trends. We may saw Asia Pacific equities follow Wall Street higher which would translate into a cautiously optimistic mood for financial markets. This may end up boding ill for the anti-risk Japanese Yen as the US Dollar extends its advance.
US Dollar Technical Analysis
Last week, the US Dollar accelerated its long-term uptrend when comparing it to an equally-weighted basket of its top 4 liquid counterparts (EUR, JPY, GBP, AUD). Near-term resistance was taken out as prices stopped short of the April 2017 high. Closing above this opens the door to perhaps testing March 2017 highs given technical confirmation.
USD Index Daily Chart
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Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
Nvidia's highly anticipated earnings report was released yesterday, but despite the numbers beating market consensus, the performance lacked a "wow" factor for investors. As a result, the market seemed to have already priced in the earnings, leading to a decline in all three major indexes on Wall Street. Despite yesterday's technical correction, Nvidia's strong earnings suggest that the tech industry remains robust, with ongoing demand for Nvidia's chips potentially driving future gains
This week's economic events include: Japan's Monetary Policy Minutes and U.S. Services PMI on Monday, impacting JPY and USD. Tuesday's RBA Interest Rate Decision affects AUD, with German Factory Orders influencing EUR. Wednesday sees German Industrial Production and U.S. Crude Inventories impacting EUR and USD. Thursday: RBA Governor speaks, with U.S. Jobless Claims. Friday: China's CPI and Canada's Unemployment Rate affect CNY and CAD.
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This week, key economic events expected to generate high volatility include China's Q2 GDP and retail sales data, impacting CNY. The US will release Core Retail Sales and Philadelphia Fed Manufacturing Index, affecting USD. The UK's CPI data will influence GBP, and the ECB Interest Rate Decision and Press Conference will impact EUR. These events will drive significant market movements due to their influence on monetary policy and economic outlooks.