Forex Today: A quiet start to the third quarter ahead of key data releases

Eren Sengezer FXStreet

Here is what you need to know on Friday, July 1:

Following a volatile American session amid soft US inflation data and month-end flows on Thursday, markets stay relatively calm early Friday. Nevertheless, investors remain cautious ahead of June inflation figures for the euro area. In the second half of the day, the ISM Manufacturing PMI report will be featured in the US economic docket. The US Dollar Index recovers modestly toward 105.00 and the US stock index futures trade deep in negative territory.

ISM Manufacturing PMI Preview: High inflation component steal the show, boost dollar.

In an interview with Austrian newspaper Oberoesterreichische Nachrichten, European Central Bank (ECB) policymaker Robert Holzmann noted that he would have preferred the bank to hike its policy rate earlier. Eurostat is expected to report that the annual Harmonised Index of Consumer Prices (HICP) rose to 8.3% in June from 8.1% in May.

Eurozone Inflation Preview: Core holds the keys, with 4% set to trigger a EUR/USD rally.

Earlier in the day, the data from China showed that the Caixin Manufacturing PMI improved to 51.7 in June from 48.1 in May but this print doesn't seem to be having a positive impact on market sentiment in the early European session.

Meanwhile, cure oil prices fell sharply after OPEC+ decided to stick to its current plan of increasing the output by 648,000 barrels per day in August. The group refrained from discussing the output strategy from September. The barrel of West Texas Intermediate (WTI), which fell more than 3% on Thursday, was last seen losing 0.8% on the day at $105.15.

EUR/USD staged a decisive rebound during the American session and ended up closing in positive territory on Thursday. The pair stays on the back foot early Friday and edges lower toward 1.0450.

GBP/USD registered small daily gains on Thursday but turned south early Friday. The pair was last seen retreating toward 1.2100.

USD/JPY fell sharply on Thursday amid falling US Treasury bond yields. With the benchmark 10-year US T-bond yield losing nearly 2% below 3% so far on the day, the pair trades in negative territory below 135.00 in the European morning.

Gold failed to take advantage of falling yields and closed the fourth straight day in negative territory. Sellers continue to dominate XAU/USD's action early Friday with the pair trading below $1,800 for the first time since mid-May.

Although Bitcoin climbed above $20,000 on Friday after having dropped below that level on Thursday, it failed to preserve its recovery momentum and was last seen trading near $19,300. Ethereum continues to trade within a touching distance of $1,000.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD stays well offered below 1.1800

The selling pressure on EUR/USD is picking up pace, with the pair slipping decisively below the key 1.1800 level and sliding to fresh two week lows as Wednesday’s session draws to a close. The move lower comes as the US Dollar finds renewed strength after the latest round of US data and the release of the FOMC Minutes. Next of note on the docket will be the US weekly Initial Jobless Claims.

GBP/USD reaches multi-day lows near 1.3500

GBP/USD reverses its initial upside momentum and is now adding to previous declines, approaching the 1.3500 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs near the $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Bitcoin has found or is near a bottom, extended consolidation to follow: K33

Bitcoin (BTC) is nearing or has already established a bottom, which could be followed by a sustained period of slow price movement, according to K33.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.