The unexpected rate hike by the BoJ caught the FX world off guard on Wednesday, while the Fed stayed put but hinted at a possible rate cut in September. Now, all eyes are on the upcoming BoE decision, with uncertainty surrounding a potential rate reduction.
Key Events for August 1:
The USD Index (DXY) faced pressure from the BoJ-driven yen strength and cautious remarks from Fed Chief Powell. On August 1, watch for the ISM Manufacturing PMI, Initial Jobless Claims, Construction Spending, and the final S&P Global Manufacturing PMI.
EUR/USD saw a reversal in its weekly retracement, hovering around 1.0850. Keep an eye on the final HCOB Manufacturing PMI in Germany and the Eurozone, along with the ECB Economic Bulletin and the Unemployment Rate data.
GBP/USD showed modest gains near 1.2850 ahead of the BoE decision. Look out for the Nationwide Housing Prices report and the final S&P Global Manufacturing PMI in the UK.
USD/JPY tumbled after the BoJ rate hike, breaking below 150.00. Japan’s only notable release on August 1 will be the weekly Foreign Bond Investment figures.
AUD/USD slipped below 0.6500, signaling potential for further losses. Keep an eye on the final Judo Bank Manufacturing PMI and the Balance of Trade figures on August 1.
WTI prices found some relief amid geopolitical tensions and a drop in US crude oil inventories, pushing prices near $78.00 per barrel.
Gold prices climbed to around $2,440 per ounce troy, while Silver approached $29.00 per ounce, continuing its upward trend.
Analysis:
The BoJ’s surprise rate hike and the Fed’s dovish tone have created volatility in the FX markets, impacting major currency pairs. The upcoming BoE decision adds to the uncertainty, with potential implications for GBP traders. Investors should closely monitor key economic indicators and central bank actions to navigate market movements and make informed decisions.