Forex news from the European trading session - 30 July 2021
Headlines:
- Eurozone Q2 preliminary GDP +2.0% vs +1.5% q/q expected
- Eurozone July preliminary CPI +2.2% vs +2.0% y/y expected
- China's Politburo says that will keep yuan exchange rate basically stable
- Japan officially announces state of emergency for four more prefectures
- Germany Q2 preliminary GDP +1.5% vs +2.0% q/q expected
- Italy Q2 preliminary GDP +2.7% vs +1.3% q/q expected
- Australia PM Morrison outlines road map out of restrictions for the country
- Switzerland July KOF leading indicator index 129.8 vs 130.0 expected
- Spain Q2 preliminary GDP +2.8% vs +2.2% q/q expected
- France Q2 preliminary GDP +0.9% vs +0.8% q/q expected
- Japan's Nishimura: COVID-19 infections are most likely not at their highest yet
Markets:
- EUR leads, AUD lags on the day
- European equities lower; S&P 500 futures down 0.6%
- US 10-year yields down 3 bps to 1.239%
- Gold flat at $1,827.24
- WTI down 0.1% to $73.52
- Bitcoin down 2% to $38,887
The market kept relatively calm during the session despite more defensive risk tones early on as tech stocks were hurt by more negative sentiment from a resumption in the China selloff and also as Amazon earnings disappointed.
Nasdaq futures were dumped by as much as 1.4% but trimmed losses to near 1.0% as we look towards North American trading. But the softer risk tones are still prevailing with European indices also mostly down 0.5% to 1.0% on the day.
Treasury yields also kept lower but isn't breaking away from the middling range this week, with 10-year yields down around 1.24% to 1.25% in European trading.
Euro area Q2 data showed a stronger rebound than expected while inflation in July topped the ECB's target of 2%, albeit largely boosted by higher energy prices.
FX played by its own game though as the dollar held steadier throughout with some pushing and pulling. EUR/USD moved up from 1.1885 to 1.1910 before settling back near unchanged levels now with large expiries capping the move at 1.1900.
GBP/USD moved up from 1.3950 to 1.3980 before paring that advance to flat levels now as the dollar finds some footing in what still looks to be its worst week since May.
The aussie and kiwi held are keeping softer amid the more defensive risk tones with the former seeing a push towards 0.7400 falter back to 0.7365 as Australian PM Morrison unveils a high threshold on vaccinations before easing international borders.
I would say that risk sentiment will be a key driver to the final moves this week but also keep in mind that we might get some action going into the month-end fix.
Have a great weekend, everyone!
