ATTENTION SHIFTS BACK TO DATA AFTER FED
The global financial markets will revert back to the economic calendar on Thursday following the Federal Reserve’s decision to stand pat on interest rates. At last glance, markets were still abuzz following the Fed statement, with the dollar falling to its lowest level in 15 months.
The Fed kept interest rates at 1.25% Wednesday and said balance sheet normalization would begin “relatively soon.”
US stocks held onto gains following the press release to notch fresh record highs.
The economic calendar heats up at 06:00 GMT Thursday with a report on German consumer confidence. GfK’s forward-looking consumer confidence survey is forecast to hold steady at 10.6 for August.
North America is where all the action is on Thursday, with the US government scheduled to release a deluge of economic data. Multiple reports are scheduled at 08:30 GMT, including the Labor Department’s weekly jobless claims data and the Chicago Fed’s National Activity Index.
At the same time, the Commerce Department will report on June durable goods orders. Orders for manufactured goods meant to last three years or more are forecast to climb 3% in June after falling 0.8% the previous month.
At 15:00 GMT, the Kansas City Fed will release its monthly manufacturing survey.
The US dollar plunged on Wednesday to its lowest level in 15 months, as a dovish Fed continued to weigh on the world’s most actively traded currency. A weaker dollar sent precious metals soaring, with gold futures climbing to six-week highs.
The dollar’s declines on Wednesday came at the hands of the euro, pound, and yen.
The euro forged ahead in mid-week trading, with the EUR/USD approaching 1.1800 for the first time since late 2014. The pair is holding solid support at the 1.1570 zone, which corresponds with the 23.6% Fibonacci retracement of the 1.172 uptrend. The euro accounts for more than half of the weighting in the DXY basket, so traders can expect heavy losses for the index should the common currency continue higher.
Cable joined the euro in rally mode on Wednesday. Cable was last seen trading at 1.3150, having gained 0.2% from the previous close. The GBP/USD exchange rate is looking to test new highs after breaking above year-to-date highs (1.3127). Traders can, therefore, expect further upside.
A plunging dollar served as a tailwind for gold prices, which rose more than 1% to fresh six-week highs. Prior to the latest rally, gold’s inverse relationship with the greenback had been lacking. The return of this long-established relationship may help bullion establish new highs in the short-term, with the bulls continuing to eye the elusive $1,300 level. The spot price was last seen hovering just north of $1,264.00 a troy ounce.