GBPUSD licks its wounds at six-week low as key US catalysts loom

Market momentum remains dicey early Thursday as traders await this week’s top-tier data/events after an unconvincing run-up of the US Dollar, backed by the rebound in Treasury bond yields. Additionally, the month-end and the quarter-end consolidation join a lack of risk news to limit the moves and test the traders’ previous biases.

With this, the US Dollar Index (DXY) braces for a fourth consecutive weekly gain despite lacking upside momentum. The same exerts downside pressure on the EURUSD and GBPUSD, especially more amid the political pessimism in the Eurozone and mostly downbeat UK data. Further, USDJPY rose to the highest level since 1986 before posting a mild pullback amid fears of Japan’s intervention to defend the Yen.

AUDUSD stays on the front foot for the third consecutive day amid fresh hawkish bias about the Reserve Bank of Australia (RBA) but the NZDUSD stays pressured at the lowest level in six weeks on economic fears about New Zealand (NZ) raised by NZ Treasury. Moving on, USDCAD appears indecisive on a weekly basis after rising in the last two consecutive days amid softer Oil prices and upbeat US Dollar, not to forget strong Canada inflation data. It’s worth mentioning that downbeat prints of China's Industrial Profits challenge the recovery of the commodities and Antipodeans amid a sluggish Asia-Pacific trading session.

Crude Oil remains sidelined as the latest build in the weekly US oil inventories joins the US Dollar rebound and China woes to challenge the energy demand outlook even as the OPEC+-led supply crunch looms. On the same line, Gold price appears set for the first monthly loss since early 2024 as traders reassess the previous rally amid the hawkish Fed bias and China’s pause in bullion buying.

BTCUSD and ETHUSD lick their wounds as bears keep the reins ahead of the much-awaited ETH ETF Launch and price-favoring options expiry signals.

Following are the latest moves of the key assets:

• WTI Crude oil struggles to defend the third consecutive weekly gain at a two-month high, making rounds to $80.80 at the latest.
• Gold snaps a two-day losing streak as traders flirt with $2,300 as we write.
• The USD Index retreats from the highest level in eight weeks, down 0.15% intraday near 105.90 by the press time.
• Wall Street closed with minor gains while the Asia-Pacific shares drifted lower of late. That said, equities in Britain and Europe remain slightly positive during the initial trading hour.
• BTCUSD and ETHUSD both fade the week-start rebound from the monthly low despite lacking downside momentum around $60,700 and $3,370 of late.

US Dollar bulls stay in driver’s seat ahead of top-tier catalysts…

Although the US Federal Reserve (Fed) Bank Stress Test and New Home Sales argued against the hawkish Fed bias, the US Dollar buyers managed to keep the reins while tracing upbeat Treasury bond yields. The Greenback’s latest gains could be linked to the month-end and quarter-end consolidation amid a cautious mood ahead of frontline catalysts. Also likely to have favored the Greenback are the latest Fed talks suggesting fewer rate cuts in 2024 versus the other major central banks which have already shifted the gears.

Among the top-tier central banks, the European Central Bank (ECB) officials are mostly certain of witnessing more rate cuts amid unimpressive data from Germany and France. Also weighing on the EURUSD prices could be the political pessimism in the bloc after the late fame of the extreme right-wing parties ahead of national elections.

On the same line, the GBPUSD struggles at a six-week low as downbeat UK CBI Retail Sales figures for June and estimations for July supersede the hawkish bias of the Bank of England (BoE). Additionally, the challenges for the UK’s ruling party in the upcoming national elections also exert downside pressure on the Cable.

Alternatively, Wednesday’s upbeat Aussie inflation data renewed the hawkish RBA bias and kept the AUDUSD pair on the front foot despite mixed sentiment and looming challenges for China. Meanwhile, NZDUSD bears the burden of downbeat economic forecasts from the NZ Treasury and the Reserve Bank of New Zealand’s (RBNZ) rate cut bias.

It should be noted that the USDCAD shows a lack of selling interest despite strong Canada inflation data and upbeat Oil prices, Canada’s main export item. The reason could be linked to the Bank of Canada’s (BoC) readiness for further rate cuts.

Elsewhere, Crude Oil bulls take a breather after the weekly US oil inventories suggest a surprise build in the stockpiles. Also weighing on the energy benchmark are economic woes surrounding the major energy users and the strong US Dollar.

Gold price portrays the perfect consolidation of the monthly and quarterly gains amid the US Dollar’s rebound and China’s recent hesitance for the XAUUSD buying. Furthermore, a mixed move of the equities and firmer yields also challenge the bullion prices.

• Strong buy: USDCAD, USDJPY, US Dollar, Silver
• Strong sell: AUDUSD, NZDUSD, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold, DJI30, USDCNH
• Sell: DAX, FTSE 100, EURUSD, Crude Oil

A busy day ahead…

Having witnessed unimpressive moves so far in the week, traders are likely to experience volatility during Thursday and Friday as top-tier data/events occupy the economic calendar. Among them, the first political debate among the key US Presidential candidates, namely Joe Biden and Donald Trump, will gain major attention on Thursday. Also important to watch will be the weekly US Jobless Claims and monthly prints of the US Durable Goods Orders and the final readings of the US Q1 GDP. Elsewhere, Eurozone Consumer Confidence, Economic Sentiment and Business Climate data will join the UK Financial Stability Report to entertain the market players.

Following that, the presence of the US Core PCE Price Index, known as the Fed’s favorite inflation gauge, japan's inflation, and the UK GDP will populate Friday’s economic calendar and offer a live end to the sluggish week.

It should be noted that Trump’s preference for anti-China policies and favor for the crypto might allow the US Dollar to edge higher should Biden struggle to win the debate. On the other hand, upbeat US data will confirm the hawkish Fed bias and allow the Greenback to end the week, month, and quarter on a firmer footing. Elsewhere, the Euro and the British Pound (GBP) are likely to struggle due to the political woes while the JPY bears the burden of the BoJ’s hesitance for further rate hikes. Furthermore, Crude Oil could edge higher but the Gold may attract sellers amid a bearish technical set-up and the US Dollar favoring fundamentals.

May the trading luck be with you!