In this article, we have covered the highlights of global market news about the US Dollar Index, XAU/USD, EUR/USD and GBP/USD.
The US Dollar Index is now trading in the low 106.00s.
The US Dollar Index (DXY), which compares the value of the dollar to a number of its key competitors, has been fluctuating around the 106.30 area so far on Tuesday.
With the upside obviously restricted in the neighborhood of the 107.00 mark and the lower bound clearly constrained at the 105.00 zone, the index stays on the defensive in the first part of the week, always within the larger consolidation theme.
While market speculation over a probable 75 basis point rate rise at the Fed’s September meeting appears to have subsided among investors in recent hours, the dollar trades cautiously ahead of the release of the crucial US inflation numbers for the month of July coming on Wednesday.
The IBD/TIPP Economic Optimism Index and the NFIB Business Optimism Index are expected later in the US data area before the American Petroleum Institute’s weekly report on US crude oil supply (API).
The index is still under pressure after rising to the edges of the 107.00 level shortly after strong US Nonfarm Payrolls statistics more than surpassed expectations in July.
In the meanwhile, despite ongoing caution ahead of the US CPI and predictions for the Federal Reserve to continue its rapid normalization, the dollar appears likely to prolong the present range-bound trend.
XAU/USD trades with small losses, and the downside seems to be constrained by the weaker US dollar.
Tuesday sees a little decline in gold prices as it loses some of the gains made the previous day and retreats from the one-month peak reached last week. The XAU/USD is now trading at the $1,785 area, down more than 0.15 percent on the day, and has been on the back foot throughout the early European session.
The safe-haven status of gold seems to be threatened by indications of stability in the equities markets, albeit a number of factors could serve to limit the downside. Market optimism is constrained by rising recession worries, US-China tensions over Taiwan, and other factors. In addition, the US dollar continues to suffer due to a drop in US Treasury bond rates, which is perceived as supporting the dollar-denominated commodity to some extent. However, despite rumors that the Fed would continue on its aggressive policy tightening course, bulls are hesitant to initiate aggressive wagers.
In fact, the markets now estimate that there is a 70% possibility that the Fed will raise interest rates by 75 basis points in September. Fed Governor Michelle Bowman’s comments on Saturday, in which she said that the US central bank might consider further 75 bps rate rises at upcoming sessions, confirmed the wagers. This is thus seen as serving as a headwind for the gold that doesn’t yield. Ahead of the newest US consumer inflation numbers, which are expected to be released on Wednesday, investors may decide to hold off on making risky bets and instead choose to stay on the sidelines.
The EUR/USD will continue in the 1.00-1.02 range for the rest of this year, according to ING.
The EUR/USD rate is still sluggishly fluctuating between 1.01 and 1.03. The most traded currency pair in the world is anticipated to trade down for the remainder of 2022, according to economists at ING.
This pair will be influenced by geopolitical reasons and US data/Fed talk instead since the European data schedule is unusually weak this week.
“For the balance of this year, our baseline is for EUR/USD to move lower and stay close to the 1.00-1.02 range.”
If Truss seems to be the next prime minister, the GBP/USD will fall, according to Mizuho
The Conservative Party leadership election in the United Kingdom, which is scheduled to go through September, deserves attention. The British pound would suffer if Foreign Minister Liz Truss won, according to experts at Mizuho Bank.
GBP/USD will fluctuate in a constrained band around 1.20 in August.
The GBP/USD pair will fluctuate in a small range in August, around 1.20.
According to recent surveys, Foreign Minister Liz Truss is in charge. Her capacity to manage the economy, though, is rife with uncertainty. She has advocated for tax cuts (and the cessation of tax increases) without specifying how they would be funded, for instance, and she has said that the UK should take inspiration from Japan in terms of how to combat inflation.
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