The latest data highlights the strong momentum of the US economy, and the US dollar has seen its longest single-day rally since February.
The Bloomberg Dollar Spot Index rose 0.3% to the highest level since June 23, on track for a fifth consecutive gain.
On Wednesday, both U.S. economic growth and inflation data exceeded expectations, bolstering the Federal Reserve’s hawkish stance. Economic activity rebounded in the second quarter due to a modest recovery in consumer spending, while core personal consumption expenditures (PCE) – the Fed’s preferred inflation gauge – rose by 2.5% compared to the second quarter of 2024. Previously, ADP Research’s private sector employment data indicated an active labor market.
Valentin Marinov, head of G10 foreign exchange strategy at Crédit Agricole, said: “The market may think that these data support the Fed in taking a less aggressive and more back-loaded easing policy. The attractiveness of US interest rates may increase, especially if Fed Chair Powell adheres to his still relatively neutral policy stance.”
As US President Donald Trump intensifies pressure for interest rate cuts, traders are closely watching the Federal Reserve’s policy meeting later for clues on the policy path. Although the market widely expects the Fed to keep interest rates unchanged, the focus is on the possibility of a rate cut in September, which currently stands at 60%.
Marinov added, “If US data continue to show resilience, President Trump may have to acknowledge this and even tone down his attacks on the Federal Reserve.”
Technical analysis:
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Gold: Yesterday, the US ADP and GDP data performed strongly, and Powell remained firm on no interest rate cuts, which led to a relatively strong rebound in the US dollar. The gold price dropped from around 3335 to below 3270. The PCE data and initial claims data will be released today. We can see that after the risk events pass, the price will still have a significant rebound. Therefore, after the release of the US data in the evening today, we will continue to lay out the buy operation after the low sweep of liquidity. For detailed positions, please consult the plugin.
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Nasdaq: Yesterday, we clearly pointed out in our article that the low-sweep liquidity operation should focus on the area around 23,200, and also marked it with a yellow zone on the plugin. The overnight price indeed entered this area, showing a very obvious pin-bar signal, and then started a significant rally. For overnight long positions, we suggest reducing positions and setting protective stops. For new positions opened during the day, it is necessary to wait for the PCE data in the evening. If it causes a price pullback, pay attention to whether there is a small rebound after the low-sweep below 23,450 – 23,500. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Yesterday, we suggested a wait-and-see approach for crude oil. After the price fluctuated up and down, it once touched above 71. Today, we need to wait for a pullback to confirm before taking another long position. We need to observe and confirm at around 69.50 today. Additionally, if the price sweeps below 69 with high liquidity, we should also be prepared for a low buy. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key economic data and events to focus on:
17:00 Unemployment Rate in Eurozone for June
20:30 Canadian May GDP
20:30 US Personal Consumption Expenditures Price Index for June
20:30 U.S. Seasonally Adjusted Initial Jobless Claims (in thousands) (to 0726)
