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Prelim GDP in Focus
The US Dollar is holding onto yesterday’s gains as traders brace for a fresh set of US data today. Prelim Q2 GDP, unemployment claims and pending home sales will all be on watch today. The headline GDP figure is forecast at 1.2%, down from 1.6% prior. Given the recent move to downplay near-term Fed easing probabilities, any upside surprise in today’s data will be firmly bullish for USD. On the other hand, if data is seen undershooting forecasts (as we saw on the last GDP reading), this could well see near-term Fed easing expectations being rebuilt, weighing on USD into tomorrow’s core PCE data.
Hawkish Fed Commentary
Fed commentary this week has been broadly in line with the sentiments we’ve heard over recent weeks. Earlier in the week, Fed’s Kashkari said that rate cuts this year were still possible depending on how inflation progressed. Speaking yesterday, Fed’s Bostic echoed this view saying that while inflation remained high and was expected to reduce slowly, a rate cut in Q4 looked most appropriate. Traders had previously bene looking for the Fed to cut rates in September on the back of last month’s CPI cooling. However, significant pushback from the Fed has seen these expectations pushed out with November now seen as the likely date for first easing.
Core PCE On Watch Tomorrow
Looking ahead, tomorrow’s core PCE data is expected to have a big market impact. If price pressures are seen remaining sticky, this should keep USD supported near-term while any unexpected weakness could see easing expectations being brought forward again, weighing on USD.
Technical Views
DXY
Following a recovery off the bull channel lows, the index is now attempting to break back above the 104.95 level. If bulls can hold above this zone, focus will be on a continuation higher towards the 107.04 level next. To the downside, 103.48 remains key support to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.