The USD firms, oil prices are steady, equity markets are up, and US yields rise amid tech earnings and Fed doubts. The U.S. dollar heads for its worst weekly performance in three months as investors question whether the Federal Reserve will act aggressively enough to contain inflation after leaving interest rates unchanged earlier this week. Although the greenback has steadied in early trading, it remains near one-month lows as markets continue to reassess Chair Kevin Warsh's policy outlook ahead of today's U.S. employment data. Global equity markets are mostly higher as strong earnings from Amazon and Microsoft boosted confidence in AI-driven semiconductor demand. European stocks are at record highs, Asian chipmakers rallied strongly, and U.S. futures are higher as investors continue to assess the Federal Reserve's policy outlook. Elsewhere, oil prices are steady, while gold and bitcoin ease as improving risk sentiment, profit-taking and month-end positioning reduce demand for safe-haven assets. In focus today: Markets will be watching Canadian monthly GDP, the U.S. Employment Cost Index, Chicago PMI and the University of Michigan Consumer Sentiment Index, with the releases expected to provide fresh direction for currency markets.
News Headlines. Eurozone inflation rises to 2.9% in July. Stocks set for weekly gain after tech earnings soothe AI fears, and yen retreats. Spain says 49,000 migrants entered Ceuta enclave in one day. Trump 'not sure' he will let Ukraine build Patriot missiles. Trump says Hamas has agreed to disarm over time. South Korean stock market soars 18% as investors pile back into AI. FIFA's $20bn commercial spin-off at risk as Europe unites behind World Cup boycott. Premiers tell Ottawa they 'urgently' want negotiations to begin on future of the RCMP. Dollar heads for worst week in three months as Fed doubts grow.
In currency markets. Against the USD, the Japanese yen rebounded sharply after Bloomberg analysis suggested the Bank of Japan likely intervened with an estimated ¥8.45 trillion ($52.8 billion) to support the currency, marking its strongest intraday gain since December 2023. Meanwhile, the South African rand remains under pressure, with traders warning August is historically its weakest month as seasonal carry-trade unwinding and uncertainty over the South African Reserve Bank's policy stance weigh on sentiment.
In commodity markets. Oil +0.49% | Nat Gas +0.65% | Gold -1.23% | Silver -1.42% | Copper +0.27% | Palladium -1.39% | Coffee +0.55% | Cocoa +5.63% | Soybeans -0.11% | Wheat -0.87%
CAD holds steady near six-week highs as broad-based U.S. dollar weakness following the Federal Reserve's decision to leave interest rates unchanged continues to support the loonie, despite steady oil prices. Investors now turn their attention to today's Canadian GDP report, where growth is expected to slow to 0.1% in May from April's 0.5% increase, providing fresh insight into the strength of the domestic economy and the outlook for Bank of Canada policy.
EURCAD eases in early trading as stronger-than-expected Eurozone inflation is offset by resilient demand for the Canadian dollar. Investors now turn to today’s Canadian GDP report, where growth is expected to slow to 0.2% from 0.5% previously, for further direction on the cross.
EUR eases in early trading but remains above the 1.1500 level as stronger-than-expected Eurozone inflation reinforces expectations that the ECB will keep interest rates higher for longer. Investors now turn their attention to today's U.S. employment and sentiment data, which could provide further direction for the U.S. dollar following this week's Federal Reserve decision.
GBPEUR strengthens toward the 1.1700 level as sterling continues to draw support from the Bank of England's relatively hawkish policy stance following Thursday's meeting. Stronger-than-expected Eurozone inflation has done little to lift the euro, with markets now weighing the prospect of further BoE tightening later this year against a still-cautious ECB outlook.
GBP eases below the 1.3450 level as investors scale back expectations for a Bank of England rate hike following yesterday's policy decision and Governor Bailey's cautious remarks. Attention now turns to today's U.S. data, including the Employment Cost Index, Chicago PMI and Michigan Consumer Sentiment survey, which could provide further direction for sterling.
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