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24.07.2023 Market Report


EUR/USD is holding steady above 1.1100 after bouncing off the lowest level in a week early Monday. The pair lacks a clear directional bias amid a cautious market mood and a broadly subdued US Dollar. The focus remains on the Eurozone and US PMI reports. 


GBP/USD recovers early lost ground to head toward the 1.2900 area in early Europe on Monday. Traders stay on tenterhooks ahead of the key Fed rate decision this week. However, the UK and US S&P Global preliminary PMIs will be eyed for fresh trading impetus. 


The USD/JPY edges lower on the first day of a new week and erodes a part of Friday’s strong gains to the 142.00 neighbourhood, or a nearly two-week high. Spot prices remain on the defensive through the Asian session and currently trade just below mid-141.00s, down around 0.30% for the day. The Japanese Yen (JPY) attracts some buyers in reaction to comments by Japan’s top currency diplomat Masato Kanda, saying that the recent inflation and wage rises were overshooting expectations. Speaking to reporters this Monday, Kanda added that the data available so far supports prospects for an upgrade in the Bank of Japan’s (BoJ) inflation forecasts. This revives hopes that the BoJ might tweak its Yield Curve Control (YCC) policy later this week, which, along with a softer risk tone, underpins the safe-haven JPY and act as a headwind for the USD/JPY pair.


The AUD/USD pair has found temporary support around 0.6720 in the Asian session. The Aussie asset is consistently declining from the past week as the US Dollar Index (DXY) makes a solid comeback amid hopes of one more interest rate hike from the Federal Reserve (Fed).


Wall Street pares some of Thursday’s losses on disappointing earnings from megacap tech companies. The lack of economic data in the United States (US) keeps NZD/USD traders bracing for the next week’s Federal Open Market Committee (FOMC) monetary policy decision, with the Federal Reserve (Fed) expected to deliver a 25 bps increase to the Federal Funds Rate (FFR), toward the 5.25%-5.50% area.


USD/CAD stays defensive around 1.3220 as it struggles to defend the weekly gains ahead of the top-tier data/events during early Monday. In doing so, the Loonie pair also hesitates in cheering a pullback in the US Dollar amid sluggish Oil prices.


The USD/CHF pair attracts some dip-buying near the 0.8640-0.8635 region during the Asian session on Monday, albeit struggles to capitalize on the modest intraday uptick. Spot prices currently trade just above mid-0.8600s and remain well within the striking distance of over a one-week high touched last Thursday. The US Dollar (USD) manages to preserve its recent recovery gains from its lowest level since April 2022 touched last week and turns out to be a key factor acting as a tailwind for the USD/CHF pair. That said, expectations that the Federal Reserve (Fed) is nearing the end of its current policy tightening cycle hold back the USD bulls from placing aggressive bets and keep a lid on any meaningful upside for the major.


Oil prices eased on Monday as traders awaited more rate hike cues from U.S. and European central banks, with tightening supply and hopes for Chinese stimulus underpinning Brent at $80 a barrel.


Gold price struggles to gain traction during the Asian session on Monday. The XAU/USD currently trades just below the $1,960 level, down 0.11% for the day. Market players await the Federal Open Market Committee (FOMC) meeting and Fed Chairman Jerome Powell’s press conference. These events could significantly impact the USD-denominated gold price.

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