• But inflation will stay high until the end of 2022
• Inflation should go down in 2023
• French economic fundamentals are solid

He’s speaking after the Q2 GDP and July CPI data earlier today. The former was a welcome comfort for the French economy, although the details are less rosy with domestic demand stagnating and household consumption actually shrinking during the quarter. Meanwhile, the latter reaffirmed another record inflation reading for France – so not exactly the peak just yet.

This article was written by Justin Low at www.forexlive.com.

Bitcoin
closed Thursday near $24,000, retesting that area after a failed attempt to
climb higher in the middle of last week. The first cryptocurrency has added
3.8% over 24 hours, about as much as it has gained in the past seven days.
Ethereum has added 4.8% in 24 hours, to $1720. Altcoins from the top 10 gained
between 3.8% (BNB) and 10% (Solana).

The total
capitalisation of the crypto market, according to CoinMarketCap, rose by 3.8%
to $1.1 trillion overnight.

Bitcoin has
closed above its 50-day moving average for two days. Closing the week above
22,700 would be a telling return to territory above the 200-week moving
average.

Such a
technical disposition could inspire retail buyers. Other factors are at work
for institutionalists, notably a recovery in demand for risky assets and a
pullback of the dollar from multi-year highs.

However, the
longer-term and whole picture is working against the buyers. As long as we see
tightening monetary and economic conditions, the crypto market has to move
against the tide. In addition, Guggenheim Partners‘ widely held view remains
that the industry has not yet been „cleared“ of distressed
participants. Crypto will be in trouble long-term because of regulatory
pressure and a lack of strong institutional support.

According to
the IMF, the cryptocurrency market will fall if the economy goes into
recession. Preliminary US GDP data released on Thursday confirmed the start of
a technical recession in the country.

The UK has
suggested that cryptocurrencies be treated as a new type of property, making it
much easier to protect investors in this instrument.

This article was written by FxPro’s Senior Market Analyst Alex
Kuptsikevich.

This article was written by FxPro FXPro at www.forexlive.com.

• US is not in a recession
• Inflation needs to be addressed
• Fed is going to have to do more with interest rates
• Details depend on data flow in the coming months
• Rate hikes could hurt job growth but so far, there is still momentum in hiring

He also voiced out concerns that recession fears could be self-fulfilling. He’s not exactly wrong in that sense but I mean there is no doubt that the economic numbers from the US have been rather poor. It is a bit arrogant to outright dismiss a recession but I don’t think that is all too important for markets. It is all about what the Fed will do and while more rate hikes are to follow, Bostic is following in Powell’s lead to stress on data dependency.

This article was written by Justin Low at www.forexlive.com.

The greenback has pared losses against the euro, pound, loonie, aussie and kiwi on the session now, trailing just behind the yen and franc. Even then, the dollar has moved off earlier lows and is actually posting slight gains against the pound and loonie notably. This comes as Treasury yields pull higher after a bit of a drop earlier, with 10-year yields now back up by over 4 bps to 2.72%:

Now, it is still early in the day and a technical breakdown in yields could still yet materialise. But for now, there is some apprehension and dollar bulls are making full use of that sentiment.

EUR/USD is back to near unchanged around 1.0200 with large expiries seen at 1.0200-05 as well as 1.0245-50 – which has pretty much been the range in European morning trade.

Meanwhile, GBP/USD has stumbled from a high of 1.2245 to 1.2150 now, falling back below the 50.0 Fib retracement level at 1.2213. That will be a key level to watch ahead of the daily close.

USD/CAD is also trading back up by 0.2% to 1.2830 now after having slipped to a low of 1.2790 earlier. And we have AUD/USD turning flat at 0.6985 after having hit a high of 0.7030 at the start of the session, now keeping back below the key 0.7000 handle.

I highlighted key levels on the charts earlier here and they are still very much in play.

This article was written by Justin Low at www.forexlive.com.

• Closely watching FX moves with a sense of urgency

These are similar comments to when the Japanese yen tumbled and even with the pullback this week, it hasn’t really amounted to much in the bigger picture. USD/JPY is still down 0.7% to 133.30 with the low earlier touching 132.50 and from a technical perspective, sellers still look poised to try and push the agenda towards 132.00 for now.

This article was written by Justin Low at www.forexlive.com.

• Prior +7.6%
• CPI +0.9% vs +0.6% m/m expected
• Prior +0.1%
• HICP +8.5% vs +8.1% y/y expected
• Prior +8.2%
• HICP +0.8% vs +0.4% m/m expected
• Prior -0.1%

The state readings earlier were mixed but evidently, the rise in consumer inflation in Germany’s industrial state outweighed the drop in annual inflation elsewhere. That’s not a comfortable set of figures with the EU-harmonised reading just short of the May high of 8.7% y/y. The increase in the monthly figures is also disconcerting as there will likely be a further spike come September once government subsidies expiries on 31 August.

This article was written by Justin Low at www.forexlive.com.

Headlines:

• Dollar pushes back, US Q2 GDP data in focus
• Treasury yields pull higher in European morning trade
• Eurozone July final consumer confidence -27.0 vs -27.0 prelim
• Saxony July CPI 7.2% vs 7.7% y/y prior
• Bavaria July CPI 8.0% vs 7.9% y/y prior
• North Rhine Westphalia July CPI 7.8% vs 7.5% y/y prior
• Japan says no plans to impose movement restrictions even as COVID-19 cases surge

Markets:

• JPY leads, EUR lags on the day
• European equities mostly higher; S&P 500 futures down 0.3%
• US 10-year yields up 5 bps to 2.782%
• Gold up 0.3% to $1,739.93
• WTI crude up 2.3% to $99.47
• Bitcoin up 1.3% to $23,084

The market continues to reflect on the Fed meeting yesterday and today, the dollar is finding a bit of a footing against most major currencies bar the yen. The Japanese currency surged higher in Asia trading, with USD/JPY falling to a low of 135.11 before sticking around 135.30-60 for the most part in European morning trade. That comes despite higher Treasury yields on the day. 10-year yields are up 5 bps to 2.78% with the high earlier coming in close to 2.83%.

The dollar was initially sluggish but as the euro slumped following another torrid set of economic data, the greenback managed to find some footing on the day. Euro area economic confidence slumped to a 17-month low and the selling kicked in later with EUR/USD falling from 1.0215 to 1.0120 and is holding at the lows now.

GBP/USD also slumped with a drop from 1.2190 to 1.2105 while USD/CAD moved up from 1.2800 to 1.2820 levels. Meanwhile, AUD/USD saw gains ease up near 0.7000 in a fall to 0.6965 during the session.

Risk trades are looking more guarded on the day with US futures keeping lower but all eyes are on the US Q2 GDP data now, with it being a potential catalyst for market moves now that the Fed has stressed data dependency.

This article was written by Justin Low at www.forexlive.com.

It started with some selling in the euro but as that deepened, it is turning into a broader bid for the dollar and the yen in European trading at the moment. EUR/USD has tumbled to a low of 1.0125, down 0.7% on the day, while GBP/USD has fallen from a high of 1.2190 to 1.2110 during the session.

Elsewhere, USD/CAD has erased losses to turn flat at 1.2825 now after briefly slipping below 1.2800 and we are also seeing AUD/USD fall lower by 0.2% to 0.6975 at the lows for the day after attempting to push above 0.7000 earlier. Those are key levels as highlighted in the post earlier here.

It looks like dollar buyers are showing some appetite as the post-FOMC rumblings continue, but just be wary that we do we have US Q2 GDP data to come later today and that could be a market mover in its own right.

This article was written by Justin Low at www.forexlive.com.

Things are not looking good for the euro as it continues to struggle to stay afloat despite all that is going on in the major currencies space. The dollar has been the main focus amid the Fed but the euro is stealing a bit of the spotlight today as it drops further across the board. If that isn’t an ominous signal, I’m not sure what else is there to take away from the euro’s inability to get off the floor.

While most major currencies are seeing a modest push against the dollar, the euro has struggled to get above the 50.0 Fib retracement level at 1.0283. In fact, the single currency has even struggled to contest that level and there hasn’t been much optimism after the ECB policy decision last week.

Economic data and sentiment continues to deteriorate and today’s economic confidence reading saw a drop to 17-month lows.

Surging inflation, a central bank which tends to only hike into a recession, a looming gas crisis ahead of winter, and the worst part? There doesn’t seem to be much relief on any fronts even as we dig in to the second half of the year. Sure, supply chain issues have eased slightly and energy prices have come off the boil but the continuation in the Russia-Ukraine conflict just ensures that there are more isolated problems than there are common solutions for the euro area at the moment.

Germany is set to face a serious gas crunch and a recession in Europe’s biggest economy looks more than likely at the moment. Meanwhile, Italy is facing a political upheaval and is giving more problems for the ECB to do their job – in which policymakers have already been rather slow in trying to address inflation pressures.

It’s hard to look at positives for the euro when the fundamental outlook is so dire. EUR/JPY is also now approaching its 100-day moving average to its lowest in two weeks at 137.67 while EUR/CHF is dribbling lower and threatening a push back towards 0.9700 after the break of parity.

This article was written by Justin Low at www.forexlive.com.

European indices are more mixed on the day with the early gains dissipating as US futures are also tilting lower, following a big day of gains yesterday. S&P 500 futures are down 0.5% while Nasdaq futures are down 1.1%, chipping away slightly at some of the Wall Street rally in the day before. It is still early though and we have US Q2 GDP data to work with before the open later.

Meanwhile, Treasury yields are keeping higher after holding at a key level again as noted here. 10-year yields are up 5 bps to 2.78% with the high earlier hitting nearly 2.83% – being pushed back by the 100-day moving average.

As for the dollar, it is trading mostly lower – only being little changed against the euro. EUR/USD is sitting close to 1.0200 and is still holding within a consolidation range of sorts between 1.0100 and the 50.0 Fib retracement level at 1.0283.

Meanwhile, USD/JPY is keeping lower on the day despite higher yields as the pair is down 0.9% to 135.30 currently. The 135.00 level is the key support level to watch out for at the moment:

GBP/USD is keeping just a touch higher after yesterday’s break, with the high earlier touching 1.2191. The next key resistance region to watch will be the 1.2200 level for offers and the 50.0 Fib retracement level of the swing lower from last month at 1.2213:

Besides that, commodity currencies are holding light gains against the greenback with AUD/USD flirting with a push above 0.7000 at the moment. That remains a key psychological level for the pair and buyers are looking poised after the push above the 50.0 Fib retracement level at 0.6982 yesterday:

A firm break above the figure level will tee up a potential push towards the 61.8 Fib retracement level at 0.7053 with the 16 June high at 0.7069 also in focus.

Then we have USD/CAD, which is testing 1.2800 at the moment and threatening a steeper drop after a breach of support around 1.2815-20 in trading yesterday:

A drop below that will put into focus the 100-day moving average at 1.2773 as the next key support level.

The US Q2 GDP data could provide a catalyst for market moves and overall, it looks like the dollar is showing some vulnerabilities but there are key technical levels to work through for a further breakdown in the greenback.

So far, the immediate reaction post-FOMC is just carrying with the recent pullback in the dollar and there needs to be more to convince of a significant breakdown in the bigger trend.

This article was written by Justin Low at www.forexlive.com.