US Session Key Drivers: Markets Brace for Fed Decision as Dollar Surges

The US dollar charged to new multi-week peaks on Tuesday, fueled by growing uncertainties in global trade and eager anticipation for the Federal Reserve’s upcoming interest rate decision. Investors are also eyeing the critical Nonfarm Payrolls report later this week, which could further shape market dynamics. As the dollar strengthens, global currencies and commodities are feeling the ripple effects, setting the stage for a pivotal midweek session.

On Wednesday, July 30, the spotlight falls on the US, where the Federal Reserve’s interest rate announcement will dominate headlines. Alongside this, key data releases—including the ADP Employment Report, preliminary Q2 GDP growth figures, Pending Home Sales, weekly MBA Mortgage Applications, and the EIA’s crude oil inventory report—will provide a broader picture of the US economy. Despite softer US yields, the US Dollar Index (DXY) soared past the critical 99.00 mark, reflecting a cautious risk-off sentiment in markets.

Across the Atlantic, the euro faced intense pressure, with EUR/USD sliding toward the 1.1500 support level, its lowest in weeks, as the dollar’s rally gained momentum. European markets will focus on Germany’s Retail Sales and preliminary Q2 GDP figures, alongside the final Consumer Sentiment and flash Q2 GDP data for the broader Eurozone, which could signal the region’s economic trajectory amid global headwinds.

The British pound also took a hit, with GBP/USD dropping to levels not seen since mid-May, hovering just above the 1.3300 support. This marked the fourth consecutive day of declines for the pair. In the UK, attention will turn to the Nationwide House Price Index and the final S&P Global Manufacturing PMI, set for release on August 1, as investors gauge the health of the British economy.

In Asia, USD/JPY encountered resistance near 148.80, pausing its multi-day climb. Japan’s markets are preparing for a busy Wednesday, with the Bank of Japan’s interest rate decision taking center stage, accompanied by data on Industrial Production, Retail Sales, and Foreign Bond Investment. These releases could influence the yen’s path as it navigates the dollar’s dominance.

The Australian dollar wasn’t spared, with AUD/USD dipping below the critical 0.6500 level to a seven-day low, driven by the dollar’s relentless advance. Australia’s upcoming Inflation Rate data will be closely watched, as it could sway expectations for monetary policy and the currency’s near-term outlook.

In commodities, crude oil prices extended their upbeat momentum, with WTI breaking past $69.00 per barrel to a two-week high. Easing trade tensions and the prospect of tighter US sanctions on Russia bolstered this rise. Gold, meanwhile, found some footing, climbing modestly to the $3,330 per troy ounce region as markets digested US-China trade talks and awaited the Fed’s next moves. Silver, however, remained volatile, testing the $38.00 per ounce zone with slight declines.

As global markets brace for a flurry of economic data and central bank decisions, the US dollar’s strength continues to dictate the pace. Wednesday’s developments, particularly the Fed’s verdict, could either amplify or temper this momentum, with ripple effects across currencies and commodities worldwide.