26/07/2024
Written by: Ian Morley
Summary:
Demand for the USD surged yesterday as treasury yields rose in anticipation of the core PCE inflation figures due on Friday. Earlier in the day, the EUR declined when regional German inflation numbers came in lower than the previous month, causing GBPEUR to briefly reach its highest level since August 2022.
Speeches:
Market Insight:
Second Q1 estimates for US GDP, expected to be downgraded to 1.3% growth from 1.6%, and core PCE, expected to remain at 3.7%, will be released this afternoon. The price action over the past three days on the USD has been notable, with both GBPUSD and EURUSD retreating sharply from recent highs. This movement could indicate that the markets are either booking profits on the recent gains or anticipating an upside surprise in tomorrow’s core PCE figures.
Analysis:
Yesterday, we suggested that GBP might be overbought, relatively speaking. Today, we observe that recent price action indicates the USD could be poised for a rebound. There has been a significant support line on the USD index throughout this year, with the currency rebounding four times from this line before making gains. Could tomorrow’s core PCE numbers continue this trend?