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Sterling slumps 0.5% vs euro ahead of UK GDP data

“The only thing worse than starting something and failing… is not starting something.” — Seth Godin

 

 

HEADLINES

 

 

  • Sterling slumps 0.5% vs euro ahead of UK GDP data
  • Gold inches lower on rate hike expectations by Federal Reserve
  • Oil rises as IEA hikes 2022 demand growth forecast
  • S&P 500 at three-month high on rising bets of smaller rate hikes
  • Short-term Treasury yields fall after another inflation report shows easing price pressures
  • EUR/USD: Break above 1.380/85 to prompt a rise toward 1.05/1.06 – Scotiabank
  • EURJPY Near Term: Upside favored

 

 

Sterling slumps 0.5% vs euro ahead of UK GDP data

 

 

Sterling fell against the euro on Thursday a day ahead of gross domestic product (GDP) figures which are expected to show further signs of a weakening British economy.

The pound is one of the worst performers out of the G10 currencies this year, having fallen almost 10% against the U.S. dollar in 2022.

On Thursday, sterling was roughly flat against a weakening dollar on the back of softer-than-expected U.S. inflation data. Traders said the UK currency's fall against the euro gave a clearer picture of the state of the economy.

According to a Reuters poll of economists, UK GDP is expected to have shed 0.3% in the second quarter from a 0.4% growth in the first three months of the year.

 

 

COMMODITIES

 

 

Gold inches lower on rate hike expectations by Federal Reserve

 

 

Gold prices edged lower on Thursday, weighed down by prospects of more rate hikes by the U.S. Federal Reserve even as data pointed to signs of inflation peaking.

Spot gold fell 0.1% to $1,789.83 per ounce by 1741 GMT. U.S. gold futures settled down 0.4% at $1,807.2.

Gold, which yields no interest, got a slight fillip on Wednesday as relatively tame July U.S. CPI numbers toned down bets for aggressive rate hikes from the Federal Reserve.

 

 

ENERGY

 

 

Oil rises as IEA hikes 2022 demand growth forecast

 

 

 

Oil prices rose more than $2 on Thursday after the International Energy Agency raised its oil demand growth forecast for this year as soaring natural gas prices lead some consumers to switch to oil.

 Brent crude futures gained $2.39, or 2.5%, to $99.79 a barrel by 1348 GMT, while U.S. West Texas Intermediate crude futures rose $2.65, or 2.9%, to $94.58 .

U.S. crude oil stocks rose by 5.5 million barrels in the most recent week, the U.S. Energy Information Administration said, more than the expected increase of 73,000 barrels. 

 

STOCKS

 

 

S&P 500 at three-month high on rising bets of smaller rate hikes

 

 

The S&P 500 was trading at its highest level in more than three months on Thursday, extending a rally from the previous session as fresh evidence of cooling inflation further cemented hopes of a smaller rise in interest rates.

The benchmark index (.SPX) rose after data showed U.S. producer prices unexpectedly fell in July, bolstering the chance of a 50-basis point hike by the Federal Reserve in September instead of 75 basis points.

Meanwhile, the number of Americans filing new claims for unemployment benefits rose for the second straight week, indicating further softening in the labor market despite tight conditions.

 

 

Short-term Treasury yields fall after another inflation report shows easing price pressures

 

 

Short-term Treasury yields slipped on Thursday and the yield curve steepened as market participants digested another economic report that showed a slowdown in inflation.

The three-month yield fell nearly 5 basis points to 2.551%. The 2-year Treasury yield was up 1 basis points lower at 3.225%, following a dramatic move in the previous session. Yields move inversely to prices, and a basis point is equal to 0.01%.

Meanwhile, the yield on the benchmark 10-year Treasury note rose 6 basis points to 2.878%. The yield on the 30-year Treasury bond was up more than 11 basis points to 3.161%.

The moves helped to ease inversions along the yield curve, which are seen as recession signals by Wall Street.

 

 

ANALYSIS

 

 

EUR/USD: Break above 1.380/85 to prompt a rise toward 1.05/1.06 – Scotiabank 

 

 

“EUR/USD renewed buying pressure through early European trade has built a solid, short-term base around 1.0275 (40-day MA and former resistance, now support) for a renewed attack on yesterday’s high just under 1.0370 (May and June lows at 1.0360, therefore resistance).”

“Spot is nearing the top of the bear channel in place since Feb (1.0380/85); a breakout should confer more strength on the EUR and prompt a rise to 1.05/1.06.”

 

 

CHART

 

 

EURJPY Near Term: Upside favored

 

 

Technical View: Long position above 136.25. Target 137.88. Conversely, break below 136.25, to open 135.89.

Comments: The pair is expected to resume advance after correction.

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

Footnotes
https://www.reuters.com/markets/europe/sterling-slumps-05-vs-euro-ahead-uk-gdp-data-2022-08-11/
https://www.reuters.com/article/global-precious/precious-gold-inches-lower-on-rate-hike-expectations-by-federal-reserve-idUSL4N2ZN2JK
https://www.reuters.com/business/energy/oil-falls-demand-concerns-greater-supply-2022-08-11/
https://www.reuters.com/markets/europe/futures-extend-gains-ahead-more-data-inflation-2022-08-11/
https://www.cnbc.com/2022/08/11/us-bonds-treasury-yields-in-focus-after-key-inflation-data.html
https://www.fxstreet.com/news/eur-usd-break-above-1380-85-to-prompt-a-rise-toward-105-106-scotiabank-202208111421
 

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