Market Drivers – US Session – Thursday, July 28

Financial markets witnessed another volatile trading session on Thursday. Most markets were literally struggling for obvious direction. The US dollar was under pressure during Asian trading hours, resurged during the European session and was put again under pressure in the American afternoon.

Safe-haven assets were the best performers against the US dollar. USD/CHF plunged to 0.944, while USD/JPY bottomed at 134.19, both trading nearby. Gold soared and now changes hands at $1,755 per ounce. Crude oil prices eased, and WTI settled at $97 per barrel.

The GBP/USD pair maintained the bullish momentum and reached 1.2190, now hovering around 1.2165. Commodity-linked currencies posted modest intraday losses, helped by soaring equities. AUD/USD quotes at 0.6980 while USD/CAD is at 1.2820.

Economic Data

The US published the second quarter Gross Domestic Product, which showed that the economy entered a technical recession after contracting by 0.9% in the three months to June and following a 1.6% contraction in Q1. However, equities seemed to ignore the news. US indexes soared and reached fresh multi-week highs, where they stand early in the Asian session.

There were 256,000 initial jobless claims in the week ending July 23, the weekly data published by the US Department of Labor (DOL) showed on Thursday. This print followed the previous week’s print of 261,000 and came in worse than the market expectation of 253,000.

Other Developments

Biden had talks with Chinese President Xi Jinping as part of US efforts to deepen lines of communication, responsibly manage differences, including the independence of Taiwan and address issues of mutual interest. There was no mention of tariff reduction.

The US dollar’s earlier surge was attributed to renewed recession-related fears following the release of tepid European data. The EUR/USD pair traded between 1.0113 and 1.0233 to finally settle at 1.0180.


Different US authorities lessened the relevance of the negative GDP figure. Fed Chief Jerome Powell anticipated it on Wednesday, saying that a disappointing GDP figure should be taken with a pinch of salt. US Treasury Secretary Janet Yellen said on Thursday that the Q2 contraction demonstrates the economy’s move to more sustainable growth. Finally, President Joe Biden noted that Chair Powell and several other high-level banking executives claim that the US is not in a recession.

On Friday, the EU economic docket will feature Eurozone, France, Italy, and Spain’s GDP Growth and inflation readings. That is alongside Germany’s employment data and GDP Growth. On the US front, the calendar will feature the core and headline PCE Price Index for June, the Chicago PMI, and the University of Michigan Consumer Sentiment for July.

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