Following mixed action in financial markets on Thursday, investors are clinging to a cautious stance on Friday. The US economic docket will feature Personal Consumption Expenditures (PCE) Price Index data for June, the Federal Reserve’s preferred gauge of inflation, alongside Personal Income and Personal Spending figures. Finally, the University of Michigan will release revisions to July Consumer Sentiment Index data.
According to the US Bureau of Economic Analysis’ first estimate, US GDP expanded at an annual rate of 2.8% in the second quarter. This reading followed the 1.4% growth recorded in the first quarter and came in above-market expectation of 2%. Other details of the GDP report showed that the Gross Domestic Product Price Index rose 2.3% in the second quarter, coming in below the market expectation of 2.6%, while the core PCE Price Index rose 2.9% on a quarterly basis, below the 3.7% increase registered in the first quarter but above analysts’ estimate of 2.7%.
After edging lower during European trading, the Dollar DXY Index gained traction and erased its losses to close the day flat on upbeat GDP data on Thursday. Early Friday, the DXY remains in a consolidation phase below 104.50, US stock index futures are trading marginally higher and the 10-year US Treasury bond yield extended its sideways grind above 4.2%.
Global Market Movements
During Asian trading, the data from Japan showed that the Tokyo Consumer Price Index rose 2.2% on a yearly basis in July, down slightly from the 2.3% increase recorded in June. Tokyo CPI ex Food, Energy rose 1.5% in the same period. After touching its weakest level since early May below 152.00, the USDJPY currency pair staged a rebound in the American session on Thursday. Early Friday, the pair is in a consolidation phase, slightly below 154.00.
Following a two-day decline, EURUSD found a foothold and closed the day virtually unchanged on Thursday. The pair is relatively quiet on Friday and moving up and down in a tight channel at around 1.0850 in European trading. GBPUSD failed to shake off the bearish pressure on Thursday and slumped to its lowest level in two weeks at 1.2850. The pair holds above this level early Friday, but struggles to gather recovery momentum.
Gold lost more than 1% on Thursday on growing concerns over a worsening Chinese economic outlook. XAUUSD staged a technical correction in European trading on Friday and trades modestly higher on the day at around $2,370.
