The GBPUSD started the session lower and below the 50% midpoint of the range since the June 29 low at 1.2866. That level was also close to the falling 100-hour MA. The dual levels increased that levels importance.
In the US afternoon session, the price moved above that level at 1.2866 and the price shot higher closing near 1.2900 on the day (see blue line in the chart below).
GBPUSD moved above its 100 hour moving average today
The GBP was mostly higher on the day, only closing lower against the CHF and the AUD today. The AUD was the strongest of the major currencies today.
Meanwhile, the EUR was the weakest of the majors ahead of the ECB meeting which will likely announce a rate hike on Thursday. The decline in the EUR was helped by some weaker-than-expected data yesterday (PMI flash data was lower than expectations), and today. The German IFO business climate index came in lower than expected at 87.3 vs 88.0 expected and 88.6 last month. That was the lowest level since November 2022. Despite the weaker data, the central bank is still most likely to hike by 25 basis points, but it may give the central bank to speak to “data dependent” for September.
Below is the ranking of the major currencies from the strongest – the AUD – to the weakest – the EUR.
The strongest to the weakest of the major currencies
Looking at the data today:
- Philadelphia Fed nonmanufacturing index was better than expected 1.4 versus -16.6. That data can be volatile
- S&P Case Schiller price index was higher-than-expected 1.0%
The Conference Board Consumer Confidence Index® rose to 117.0 in July 2023, up from 110.1 in June, reflecting improving consumer sentiment. This increase was driven by both an uptick in the Present Situation Index, which assesses current business and labor market conditions, and the Expectations Index, measuring consumers’ short-term outlook for income, business, and labor market conditions.
July’s confidence level is the highest since July 2021, signifying an improvement in both current conditions and expectations.
The Richmond Fed composite manufacturing index was weaker than expected -9 versus -8, but the price data continued it’s move to the downside which is not a bad thing.
The Federal Reserve will announce its interest-rate decision tomorrow at 2 PM. The expectations are for a 25 basis point hike to 5.5%. The expectation (from the market) is for no change in September (80%). The market is expecting no additional changes this year although the Fed has indicated that they would be looking for an additional tightening before year-end. The market will be focused on the statement and then the comments made by Fed chair Powell at his press conference.
A snapshot of the other markets as the day comes to a close shows
- Crude oil settled above its 200-day moving average for the 2nd consecutive day. It is trading up $0.64 or 0.80% at $79.37. Its 200-day moving average is down at $77.10.
- Gold is trading up $10 or 0.52% at $1964.75
- Silver is up $0.34 or 1.42% at $24.67
- Bitcoin is trading at $29,226. At the start of the New York session, the price of the digital currency was trading at $21,104
US stocks closed higher. The Dow industrial average closed higher for the 12 consecutive day. The all-time record is 13 consecutive days back in 1987.
- Dow industrial average rose 26.83 points or 0.08% at 35438.08
- S&P index rose 12.80 points or 0.28% at 4567.45
- NASDAQ index rose 85.68 points or 0.61% at 14144.55
After the close, both Alphabet and Microsoft announced earnings. Although both beat on the top and bottom lines, the price action in post-close trading is different. Microsoft shares are trading down -$3.49 or -0.96% at $347.70. Google shares are up $9.67 or 7.98% at $132.00.
In other news today, the Teamsters union settled their labor dispute with UPS averting a strike at the end of the month. That is good news in that it does not disrupt service. The not so good is it reminds of the tight labor and how that leads to higher costs (i.e. inflationary).
In the US debt market, yields move higher ahead of the Fed decision:
- 2-year yield 4.880%, +4.2 basis points
- 5-year yield 4.171%, +4.4 basis points
- 10-year yield 3.888%, +3.1 basis points
- 30-year yield 3.932 sent +1.3 basis points