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Forexlive Americas FX news wrap 31 Jul | Forexlive

The AUD is the strongest of the major currencies today, while the JPY is the weakest. The USD is ending the day with mixed results to day with modest gains versus the EUR, GBP, CHF and JPY. The greenback is lower versus the commodity currencies led by a -1% decline vs the AUD, a -0.75% decline vs the NZD and a -0.48% decline vs the CAD.

The strongest to the weakest of the major currencies

The AUD moved higher ahead of the RBA rate decision that will be announced at 12:30 AM ET on Tuesday. The expectations are for a 25 basis point hike but it is more of a toss up. Last month the central bank kept rates unchanged but did warn of the potential for further rate hikes.

CPI inflation did decline to 6.0% YoY, lower than the 6.2% consensus. This is also the lowest quarterly rise since September 2021. Will the RBA ignore the rate being above the target, and instead focus on the downward trend?

Despite the uncertainty, the AUD had moved to the lowest level since July 7th last week before a squeeze higher today. Technically, the rise today did take the pairs price back to a cluster of MAs including the 200-day MA, the 100-hour MA and the 200-hour MA between 0.6725 and 0.6744. The price is currently trading below those levels at 0.6715.

Correcting higher today, took the price to a more neutral level that is consistent with a decision that is more up in the air.

Going into the decision, technically it would take a move above the 0.6744 level to increase the bullish bias. On the downside, the 100-day moving average at 0.66924 if broken would tilt the technical bias back to the downside.

Today, the NA economic calendar was void of any major releases. The only release was teh Dallas Fed manufacturing index which remained in negative territory at -20.0, but that was better than -23.8 last month.

Fed’s Goolsbee was the first Fed official (other than the Fed Chair Powell during his press conference) to speak after the Fed decision last week when the Fed increased rates by 25 basis points.

Goolsbee observed that over the past six months, inflation has been reduced without causing job losses. He referred to this as ‘walking the golden path.’ He further noted that issues in the banking sector, which were anticipated to cause problems, have not manifested. He commented that this period has challenged those who hold to the stable Phillips curve model, which traditionally suggests a trade-off between unemployment and inflation. According to Goolsbee, the current business cycle has been unique and the typical economic trade-offs have not applied. When questioned about a potential interest rate hike, Goolsbee indicated he doesn’t support making decisions prematurely and highlighted his openness to considering fresh data ahead of a September review. He also noted that reducing inflation without increasing unemployment would be a significant achievement.

For the month, the USD is ending lower versus all the major currencies as traders started to price in no further changes in policy

  • EUR, -0.77%
  • JPY, -1.3%
  • GBP, -1.12%
  • CHF, -2.577%
  • CAD, -0.39%
  • AUD, -0.94%
  • NZD, -1.20%

The DXY (US dollar index), fell -1.00% for the month.

In the US at that market today, yields moved modestly lower:

  • 2-year yield 4.82%, -1.4 basis points
  • 5-year yield 4.180%, -1.4 basis points
  • 10-year yield 3.965% -0.4 basis points
  • 30-year yield 4.017% -1.3 basis points

For the trading month yields were mostly higher with the longer end making the biggest move. The 2-year yield was actually marginally lower for the month (-1.5 basis points), while the 30 year yield rose by 15.4 basis points:

  • 2-year yield fell -1.5 basis points
  • 5-year, yields rose 2.5 basis points
  • 10-year yield rose 12.6 basis points
  • 30-year yield rose 15.4 basis points

In other markets

  • Crude oil prices are trading at $81.85 up $1.27 or 1.58% on the day. The price of crude oil soared by 15.87% this month. That was the largest increase since January 2022 when the futures rose over 17.5%.
  • Gold prices rose $6.23 or 0.32% to $1965.40. For the trading month, gold rose by $45.85 or 2.39%.
  • Silver increased by $0.41 today or 1.7% to $24.74. For the trading month silver rose $2 or 8.78%
  • Bitcoin is trading at $29,151. That is lower than the closing level at the end of June 2023 at $30,469.

The US stock market finished higher for the day. For the trading month the S&P and NASDAQ closed higher for the 5th consecutive month. For today:

  • Dow Industrial Average rose 100.24 points or 0.28% at 35559.54. For the trading month, the Dow Industrial Average rose by 3.35%. It was the 2nd consecutive up month for the Dow.
  • S&P index rose 6.73 points or 0.15% at 4588.97. For the trading month the S&P index rose 3.11%
  • NASDAQ index rose 29.36 points or 0.21% at 14346.01. For the trading month the NASDAQ index rose 4.05%.

The biggest movers in the Dow 30 were Boeing (13.11%), 3M (11.40%), Goldman Sachs (10.33%), J.P. Morgan (8.61%), and Caterpillar (+7.77%).

The biggest losers in the Dow 30 were Verizon (-8.36%), Merck (-7.57%), and Honeywell (-6.44%).