The last trading day of the month was a busy one for data traders as they priced in new updates from all over the world.
Which headlines moved the major assets in the last trading sessions?
We have a list for ya:
Headlines:
- Cooler core inflation in Australia reduced RBA rate hike odds
- China manufacturing PMI eased from 49.5 to 49.4 in June; Non-manufacturing PMI weakened from 50.5 to 50.2
- BOJ unexpectedly hiked rates by 0.15% while unanimously voting to taper bond purchases
- France preliminary CPI for July: 0.1% m/m (0.3% expected, 0.1% previous)
- Germany unemployment change for June: 18K (16K expected, 20K previous)
- Euro Area flash annual CPI edged up from 2.5% to 2.6% in July; Core CPI remained at 2.9%
- U.S. ADP non-farm employment change for July: 122K (147K expected, 155K previous)
- Canada monthly GDP slipped from 0.3% m/m to 0.2% m/m (0.1% expected) in May
- U.S. quarterly employment cost index for Q2: 0.9% q/q (1.0% expected, 1.2% previous)
- EIA: U.S. crude oil inventories fell by 3.4M barrels in the week ending July 26 (vs -1.6M barrels expected, -3.7M barrels previous)
- Fed kept its interest rates steady but strongly hinted at a September rate cut
- China Caixin manufacturing PMI for July: 49.8 (51.4 expected, 51.8 previous)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
The day kicked off with Australia’s June “trimmed mean core” inflation cooling off, which dampened hopes for an RBA rate hike. Then, China’s weaker-than-expected manufacturing and services PMIs stoked global growth concerns, at least until the Bank of Japan (BOJ) surprised everyone with a 15bps interest rate hike.
The BOJ not only raised interest rates to their highest levels since 2008, but they also voted to reduce bond purchases by 3 trillion JPY by Q1 2026.
The headlines kept rolling in during the European session. A Hamas leader was assassinated in Tehran, sparking fears of escalating conflict in the region and pushing crude oil prices higher. Euro Area inflation stayed stubbornly high, casting doubts on the European Central Bank’s (ECB) rate cut plans.
In the U.S., it was all about Fed rate cuts. Weak ADP data and the Fed hinting at a possible September rate cut boosted risk sentiment. Strong earnings reports from META and a tech sector rebound also fueled U.S. stock rallies.
U.S. equity benchmarks saw sharp gains, while U.S. 10-year yields dropped from 4.15% to 4.03%. Gold, a popular USD counterpart, shot up to $2,450, and WTI crude traded above $78.50. Interestingly, bitcoin (BTC/USD) missed out on the risk rally, dropping from $66,800 to just under $65,000.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
Like the previous day, the U.S. dollar mostly traded as a countercurrency early in the day. It gained sharply against the Australian dollar following a cooler core CPI reading in Australia and weak PMI reports from China. It also lost pips against the Japanese yen after the BOJ’s surprisingly hawkish policy adjustments.
The Greenback saw more uniform price movement in the U.S. session, drawing bearish pressure at the release of weaker-than-expected U.S. ADP and quarterly labor cost index.
The downswing took a breather shortly before the FOMC decision but soon regained its bearish momentum when it looked like Fed members are more ready to cut interest rates as soon as September.
USD hit new intraday lows across the board and capped the day in the red against its major counterparts.
Upcoming Potential Catalysts on the Economic Calendar:
- U.K. Nationwide house price index at 6:00 am GMT
- Spain manufacturing PMI at 7:15 am GMT
- Italy manufacturing PMI at 7:45 am GMT
- France final manufacturing PMI at 7:50 am GMT
- Germany final manufacturing PMI at 7:55 am GMT
- ECB economic bulletin at 8:00 am GMT
- Euro Area final manufacturing PMI at 8:00 am GMT
- Euro Area unemployment rate at 9:00 am GMT
- BOE policy decision at 11:00 am GMT
- BOE Gov. Bailey to give a speech at 11:30 am GMT
- U.S. Challenger job cuts at 11:30 am GMT
- U.S. weekly initial jobless claims at 12:30 pm GMT
- U.S. quarterly non-farm productivity and labor costs at 12:30 pm GMT
- Canada manufacturing PMI at 1:30 pm GMT
- U.S. final S&P manufacturing PMI at 1:45 pm GMT
- U.S. ISM manufacturing PMI at 2:00 pm GMT
The markets are in for another busy day as a parade of manufacturing PMIs are scheduled for release.
The Bank of England (BOE) may also steal the show during the European session as some traders see the central bank cutting its interest rates for the first time since March 2020.
In the U.S., manufacturing PMIs will get mixed with labor market-related reports to strengthen or weaken assumptions about Friday’s U.S. NFP report release.
Keep your eyes glued to the tube!
