Morning Market Review

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07/29/2021

EUR/USD

EUR has shown a moderate increase against USD during the Asian session, developing the "bullish" signal, formed at the beginning of the week, and renewing local highs since July 13. The day before, USD made another attempt at growth, responding to the optimistic minutes of the US Federal Reserve. Despite the deterioration of the epidemiological situation in the country, the regulator pointed to a gradual recovery of the national economy, which will soon allow considering the issue of reducing the existing incentives. The representatives of the department did not mention any specific dates, but analysts agree that it could be either the end of 2021 or the beginning of 2022. The US Fed still attributes high inflation to "temporary factors", and the labor market remains the main reference point for the regulator today. On Thursday, investors are focused on statistics from Germany on the labor market, as well as on the dynamics of consumer inflation in July.

GBP/USD

GBP is noticeably strengthening against USD in the morning session, renewing local highs since June 28. The "bulls" feel confident, despite the appearance of disappointing macroeconomic statistics from the UK, as well as against the background of a slight deterioration in the epidemiological situation in the country. In particular, yesterday investors reacted negatively to the fall in the BRC Shop Price Index by 1.2% YoY in June after falling by 0.7% YoY in May. Nationwide Housing Prices also fell 0.5% MoM in July after rising 0.7% MoM in June. Forecasts suggested an increase of 0.6% MoM. The US Fed minutes published yesterday provided USD with only short-term support, after which the sales of USD only intensified, as the representatives of the regulator took a wait-and-see attitude, without saying anything new, except for hints of a possible reduction of the quantitative easing program at the end of the year.

NZD/USD

NZD is showing fairly strong gains against USD in the Asian session, recovering from an uncertain decline the day before. Yesterday, the instrument updated local lows since July 21, but reversed upward after the publication of the US Federal Reserve's minutes, which again fell short of expectations. The growth of NZD/USD today is not hindered by weak macroeconomic statistics from New Zealand. ANZ Business Confidence index fell 3.8 points in July after falling 0.6 points in June. ANZ Activity Outlook for the same period was also revised downward from 31.6% to 26.3%, which turned out to be worse than the market's average expectations.

USD/JPY

USD declines against JPY in trading in Asia, correcting after an unsuccessful growth attempt the day before, when the published minutes of the US Federal Reserve triggered a short-term momentum to buy USD. The regulator again took a wait-and-see attitude; however, investors were optimistic about the statement of representatives of the Fed that the US economy has made progress toward the goals, the achievement of which would allow starting the reduction of the quantitative easing program. Today, the market is focused on the statistics on US Gross Domestic Product Annualized for Q2 2021, which may provoke a new wave of purchases of USD. In addition, the data on Personal Consumption Expenditures and updated statistics on Initial Jobless Claims will be released. Analysts are quite optimistic and, in particular, expect a decrease in the number of initial jobless claims below the next psychological level of 400K. Noteworthy statistics from Japan will not appear until tomorrow, when June data on unemployment and industrial production are released.

XAU/USD

Gold prices are showing moderate gains during the Asian session, updating local highs since July 20. The day before, the instrument managed to consolidate above the psychological level of 1800.00 amid the publication of the minutes of the US Federal Reserve meeting, which again turned out to be insufficiently optimistic for the formation of a stable uptrend in USD. The regulator again limited itself to only general wording regarding the prospects for reducing the existing stimulus, but the Chair of the US Fed, Jerome Powell, said that the national economy "is moving in the right direction".

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