Emerging market currencies rose on Thursday, rebounding after two consecutive days of declines, as US data indicated economic resilience and the world’s largest economy was about to release a key inflation report.
The South Korean won, the Malaysian ringgit and the Chinese yuan led the gains. As the euro rose, currencies in Central and Eastern Europe strengthened, while the Colombian peso, which had been up for most of the session, gave up its gains and closed little changed. Stock indexes fell for the third consecutive day.
The US economy grew at an annualized rate of 3.3% in the second quarter, driven by a rebound in business investment and a strong boost from trade. Traders are now awaiting data to be released on Friday to gain a deeper understanding of the inflation and wage growth indicators that the Federal Reserve favors at the start of the third quarter.
In a report on Thursday, strategists led by Alejandro Cuadrado at BBVA wrote: “Tomorrow’s personal consumption expenditures and price index will provide short-term direction for monetary policy expectations and the dollar.”
Risk assets markets have been highly volatile this week as traders weigh the optimism over a US rate cut against the brewing legal dispute between US President Donald Trump and Federal Reserve governor Lisa Cook over her dismissal. Cook sued Trump on Thursday after he accused her of lying on her mortgage application and decided to remove her from office. Both US long-term bonds and the dollar have been hit as traders question the Fed’s independence and the inflation outlook.
After the U.S. market closes on Thursday, traders will be watching the remarks of Federal Reserve Chair Christopher Waller for further clues on the interest rate outlook and the direction of the dollar.
Technical analysis:
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Gold: The price has rebounded above 3400, but it will be tested by the US PCE data today. On the other hand, there is no progress in the potential negotiations between Russia and Ukraine, which is also a potential short-term negative factor. Therefore, we continue to choose a relatively conservative approach today, waiting for the liquidity to be low and then catching the rebound signal to go long. For detailed positions, please consult the plugin.
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Nasdaq Index: Yesterday, we achieved a roughly 1:1 profit-to-loss ratio in the yellow zone. Today, we will continue to plan for buying after a low-level sweep of liquidity. The trigger for the price to fall back might be the result of the PCE data in the evening. We hope that the data will be basically in line with or slightly stronger than expectations. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Yesterday, the green buy limit area we alerted through the plugin was almost the same as the intraday low point. We suggest waiting for a new momentum breakthrough to be completed before conducting a pullback buy operation. For detailed positions, please consult the plugin.
(Crude oil 15-minute chart)
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Today’s key financial data and events to focus on:
20:30 US Personal Consumption Expenditures Price Index for July
22:00 Final reading of the University of Michigan’s consumer sentiment index for August in the US
22:00 August University of Michigan 1-year inflation expectation final value
