EUR / USD
The Euro held a solid tone after Wednesday’s European open, but was unable to make a challenge on the 1.1000 level against the US dollar.
There were no major data releases during the day and trading volumes remained low, especially with US and European markets in the peak holiday season.
Equities struggled to make any further headway after relief at the open and the Euro drifted lower, especially with higher oil prices.
The dollar maintained a firm overall tone and the Euro dipped to lows just above 1.0950 before a tentative recovery to 1.0980 as Wall Street rallied from intra-day lows.
The latest US consumer prices data will be released on Thursday.
Consensus forecasts are for the headline inflation rate to increase to 3.3% from 3.0% the previous month, primarily due to the fact that prices declined in July 2022. The core inflation rate is forecast to edge lower to 4.7% from 4.8% the previous month.
Stronger than expected data would trigger fresh concerns over inflation trends and maintain Federal Reserve determination to maintain a very hawkish policy stance.
Lower than expected data would provide important relief and increase hopes that interest rates will not have to increase further.
Tight ranges prevailed on Thursday with some relief that US futures were able to make headway and the Euro edged higher to 1.0990.
JPY
The dollar secured a limited net advance after Wednesday’s European open with a challenge on the 143.50 level against the yen despite little change in US bond yields.
There were no major data releases during the day and no comments from Fed officials while trading volumes remained low during the holiday period.
At the latest 10-year Treasury auction, yields were held below the 4.00% level which provided an element of relief.
The yen remained under pressure on Thursday even though there was only a slight increase in US yields. The dollar pushed to 1-month highs above the 144.00 level against the Japanese currency with the Euro above 158.00 with further interest in carry trades
As well as the inflation data, the US will also release the latest data on jobless claims which could have a significant impact on confidence.
Markets will be on alert for any comments from Federal Reserve officials after the US consumer prices inflation data.
GBP
There were no significant UK data releases on Wednesday with quiet conditions prevailing. Risk appetite attempted to recover early in the session, but overall conditions remained fragile with a notable lack of overall traction and Sterling was unable to hold intra-day highs.
From highs just above 1.2780 against the dollar, there was a gradual retreat to lows near 1.2710 while the Euro recovered to post a net gain at 0.8625 from lows near 0.8590. There were fresh doubts over the UK economic outlook.
The latest UK GDP data will be released on Friday with consensus forecasts for a small monthly increase for June. Second-quarter GDP is expected to be unchanged compared with the previous quarter after a 0.1% increase the previous month.
The latest RICS housing data recorded a decline in the headline index to –53 for July from a revised –48 previously. This was weaker than expectations of –50 and the weakest reading since 2009. Overall confidence remained weak with a significant impact from the rapid and sustained increase in interest rates.
Sterling overall edged lower against the dollar but held above the 1.2700 level with the Euro advancing to 0.8635.
CHF
The Swiss franc lost ground on Wednesday with a slightly more composed risk environment curbing potential buying interest. There was also further speculation that the currency was overvalued. The Euro advanced to 0.9630 on the day while the dollar secured a net gain to 0.8775.
Tight ranges prevailed on Thursday with the dollar edging lower to around 0.8760.
Technical Levels
Economic Calendar
