Market Wrap – US dollar hammered

A Reuters report that the European Central Bank (ECB) was weighing a 50-basis points rate hike at its Thursday meeting caused a big rally in the euro during the US session.

Due to the bigger than the 25 basis points hike many traders and investors has been expected it helped put the single currency on track for its biggest one-day percentage gain in nearly two months.

With this in mind the EURUSD pair is trading nearly 250 pips away from parity around the 1.0250 level. The bear party below parity has been delayed for now.

Easing expectations that the U.S. Federal Reserve would implement a 100 basis points hike at its meeting next week has caused the U.S. dollar to decline.

In fact, the US dollar index is now on track for its third straight session of declines after touching a two-decade high earlier this month.

During the New York session a number of US stocks on Wall Street advanced in broad rally. This happened alongside European stocks.

The STOXX 600 index rose 1.47% and MSCI’s gauge of stocks across the globe gained 1.56%. The FTSE100 and the German DAX also gained strongly.

In terms of market moving data, US Housing Starts data and came in weaker than expected. Housing Starts came in at 1.559 million versus 1.580 million.

Housing Permits data came in at 1.685 million versus the 1.650 million expected. It should be noted that a drop did come from the previous months 1.695 million.

Last week Fed member Waller highlighted retail sales and this week’s housing data as potential reasons to shift to 100 bps if they were ‘materially’ stronger than expected.

Despite the move lower in the US dollar, gold prices remained depressed. However, cryptos started to surge higher today with Bitcoin moving above its 200-week moving average.

Energy prices are also moving higher today ahead of the big OPEC meeting, which is scheduled for August 3^rd.