The highlight of the Asian session on Friday will be Japan's inflation data. Later in the day, the UK will report on retail sales, and Canada will release also release retail sales data. Market participants are positioning themselves ahead of next week's central bank meetings, which include the Federal Reserve and the European Central Bank.
Here is what you need to know on Friday, July 21:
On Thursday, US stocks finished modestly lower on disappointing earnings and data that could support more rate hikes from the Federal Reserve (Fed). The Nasdaq tumbled around 2%, hit by the 9% decline in Tesla and Netflix after weak results, while the Dow Jones managed to end with a 0.45% gain.
US dollar rose, with the DXY rising 0.55% and approaching 101.00. The greenback surged on the back of higher Treasury yields, with the US 10-year reaching 3.87%, the highest level in a week. Such moves were boosted by US Initial Jobless Claims data that fell to 228K, the lowest level since mid-May. Other reports came in mixed, with the Philly Fed at -13.5 in July and Existing Home Sales falling 3.3% in June. A 25 basis point rate hike from the Fed is priced in for next week, and the odds of another hike before year-end rose modestly after the latest data.
Analysts at TD Securities:
The Fed is widely expected to resume policy rate increases next week following its decision to pause in June: We look for the FOMC to tighten rates by 25bp. While we anticipate that July will bring the Fed's last rate increase of this cycle, we do not think the Fed is comfortable signaling that shift just yet. Rather, policymakers appear more comfortable maintaining a hawkish stance for now.
EUR/USD accelerated its bearish correction, falling to a one-week low near 1.1115, with the Euro underperforming. Eurozone consumer confidence data improved marginally from -16.1 to -15.1 in July. Markets expect a rate hike from the European Central Bank (ECB) next week, and the focus is on the language, with participants looking for clues about what might happen in September.
The Pound lost ground against the US Dollar but gained versus the Euro. GBP/USD fell for the fourth consecutive day, finding support at the 20-day Simple Moving Average (SMA) at 1.2830. EUR/GBP was rejected again from above 0.8700 and dropped to 0.8650. The UK will report June Retail Sales on Friday.
USD/JPY posted its highest daily close in a week, reaching levels above 140.00, boosted by higher US Treasury yields. On Friday, Japan will release the National Consumer Price Index for June, with the annual rate expected to advance from 3.2% to 3.5%.
USD/CHF posted its biggest daily gain in weeks amid higher bond yields in Europe, recovering from the lowest levels since 2015. The pair jumped from 0.8575 to 0.8687, the highest level in a week.
The Aussie outperformed on the day, boosted by Australian employment data. AUD/USD spiked near 0.6850 but then pulled back on the back of US Dollar strength, falling to as low as 0.6770.
USD/CAD dropped to 1.3115 but then rebounded, erasing gains and finishing around 1.3175. On Friday, Canada will release the May Retail Sales report, which is expected to show a 0.5% monthly gain.
NZD/USD lost ground for the fifth consecutive day, ending at 0.6230. The pair has a crucial support area between 0.6185 and 0.6210 that contains the 20, 55, 100, and 200-day SMAs.
The Central Bank of the Republic of Turkey raised its key interest rate by 250 basis points to 17.5%, less than expected. USD/TRY remains near record high levels, around 8.70.
Crude oil prices rose moderately, holding in the recent range with WTI hovering around $75.60. Cryptocurrencies lost ground, with Bitcoin falling 0.95% to $29,700. Higher US yields weighed on Gold, which tumbled to $1,965, while Silver lost 1.60%.
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD fluctuates around 1.0900 as markets await US election exit polls
EUR/USD trades sideways near 1.0900 on Tuesday. The US Dollar ignores the upbeat ISM Services PMI data for October and stays under modest selling pressure as investors await exit polls to see who is closer to winning the US presidential election.
GBP/USD clings to modest gains near 1.3000, awaits US election result
GBP/USD trades marginally higher on the day at around 1.3000 after finding support near 1.2950 on a broadly subdued US Dollar. Traders eagerly await the outcome of the US presidential election, refraining from placing fresh bets on the major.
Gold holds steady below $2,750 amid US election jitters
Gold attracts dip-buyers after touching a one-week low on Tuesday but remains below $2,750. The benchmark 10-year US Treasury bond yield stays in positive territory above 4.3% as markets eye US election exit polls, limiting XAU/USD's upside.
Crypto markets brace for volatility in tight race between Trump and Harris
The US presidential election is one of the most significant events in the world. Due to the influence of the country’s political decisions, policies, and economic approaches, it can significantly impact crypto and global markets.
US election day – A traders’ guide
Election day volatility: Brace for potential wild market swings. Election days bring opportunities, but also risks. Unclear results can increase volatility further.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.