Market Drivers – US Session – Wednesday, August 3

Mohamed Abdelhamid 4 August, 2022 3:03 am Forex Market, Market Update

US indexes surged, capping the safe-haven dollar’s demand, partially helped by strong Q2 corporate earnings reports and encouraging local data.

Commodity-linked currencies, on the other hand, benefited from Wall Street’s strength. AUD/USD trades around 0.6950 while USD/CAD is marginally lower at 1.2840.

The EUR/USD pair trades around 1.0160, as tepid European data undermined demand for the shared currency. The GBP/USD pair finished the day in the red at 1.2145.

Gold price settled at $1,765 a troy ounce, while crude oil prices edged lower, as different OPEC+ sources suggest that they won’t increase output. Also, US weekly data showed slowing demand. WTI ended the day at $90.90 a barrel.

Economic Data

The business activity in the US service sector expanded at a more robust pace in July than in June with the ISM Services PMI rising to 56.7 from 55.3. This reading came in better than the market expectation of 53.5.

Further details of the publication revealed that the Prices Paid Index declined to 72.3 from 80.1, compared to the market forecast of 81.6, and the Employment Index improved to 49.1 from 47.4.

Other Developments

Different US Federal Reserve officials reinforced the market’s speculation that the US central bank is far from done with aggressive tightening, putting a 75 bps rate hike back on the table for September.

Sino-US tensions decreased on Wednesday, pushing the US dollar down prior to the US session’s opening. The dollar recovered only after robust services sector data indicating that the local economic activity is still strong.

Recession fears maintain the US Treasury yield curve inverted, and the difference between the 2-year note and the 10-year note yields has widened to 36 bps. Nevertheless, Wall Street managed to post solid gains, helped by another batch of solid earnings reports.

The Bank of England will announce its monetary policy decision on Thursday. BoE is expected to decide the biggest rate hike in 27 years.

Also Read:
What is important about Michael Saylor’s bet on Bitcoin