Market Drivers – US Session- August 1

Mohamed Abdelhamid 1 August, 2023 2:22 am Commodities, Forex Market, Market Update

Crude oil prices surged for the third consecutive day and for the seventh time out of the last eight days. WTI got closer to $82.00 per barrel and posted its highest close since mid-April.

The US Dollar posted mixed results on Monday, rising versus the Euro, the Pound, and the Yen but pulling back against antipodean currencies and the Canadian dollar. The US Dollar Index rose and posted its highest daily close in three weeks, slightly below 102.00. US yields rebounded during the American session and finished flat, with the US 10-year yield at 3.95% and the 2-year at 4.88%.

US stocks rose modestly, with the Dow Jones gaining 0.28% and the Nasdaq rising by 0.21%. The S&P 500 climbed for the fifth straight month in July. Investors continue to cheer strong US data, the likelihood of the end of the tightening cycle, and stimulus hopes from China. The earnings season continues on Tuesday, with Merck, Toyota, Pfizer, HSBC, and Starbucks among others.

Economic Data

Eurozone’s data showed that the economy grew by 0.3% in the second quarter, and that inflation fell from an annual rate of 5.5% in June to 5.3% in July; however, the core rate remained at 5.5%.

The Euro rose after the data but did not hold onto gains and pulled back. The EUR/USD failed to break Friday’s high and to retake the 20-day Simple Moving Average (SMA), and then dropped below 1.1000, approaching a key support level.

Key Developments

The Bank of Japan bought bonds to limit the slide that followed last week’s tweak to the Yield Curve Control, weakening the Japanese Yen, which was among the worst performers on Monday. USD/JPY broke above 110.00 and posted its highest close since July 7.

AUD/USD rebounded sharply on Monday, rising above 0.6700 but found resistance at the 20 and 200-day SMA. The key event of the Asian session will be the Reserve Bank of Australia (RBA) decision. The market consensus is for a 25 bps rate hike, but many analysts predict no change. Prior to the RBA decision, Building Permits and Home Loans data are due.

USD/CAD was rejected from above 1.3250 and dropped below 1.3200. It remains sideways without a clear direction, with risks tilted to the downside.

Commodity prices rose on Monday. Gold hit levels above $1,970 but finished hovering around $1,965, while Silver climbed 1.60%, ending at $24.75. Cryptocurrencies were little changed, with Bitcoin dropping 0.25% to $29,190.

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