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The dollar extended its drop on Thursday morning after Wednesday’s inflation data came in softer than forecast. Investors continue to digest the latest data as markets price in an inflation pivot amid central bank tightening. Oil steadies as investors pay close attention to OPEC and IEA market outlook. The pound remained on the backfoot ahead of UK’s GDP data on Friday.
NZDUSD rallied by +0.30% in the European session ahead of the initial Jobless claims. The Initial Jobless Claims are expected to rise to 263K from a previous reading of 260K underpinning dollar strength. A softer US CPI data for July indicated a slowing inflationary outlook making investors price out further tightening by the Fed. The pair broke above the 0.6400 level, a 9-week high and upside gains are capped by the 0.6420 and 0.6550 levels. However, downside targets below 0.63500 are at 0.6300 and 0.6200 levels.
EURCAD surged by +0.23% as investors continue to digest crude oil demand. Investors eye the OPEC monthly and IEA market reports due for release later in the day. However, the energy crisis in Europe could weigh on Euro strength and limit upside gains. Bulls are capped by the 1.3200 level and a break above that high could reinforce a bullish outlook toward the 1.34000 level. A break below 1.3100 could invalidate the bullish outlook towards the 1.3000 psychological support.
GBPJPY plunged by -0.18% on Thursday ahead of Friday UK GDP data. UK’s housing market continues to shrink after a 6-months historic rate hike cycle. The RICS House Price Balance dropped from 65 to 63 despite being better than expected. The GDP data is expected to slump from a previous reading of 8.7% to 2.8% YoY Q2 data on Friday reviving recession fears. The pair extended losses towards the 161.700 support and a break below that area could trigger selling pressure towards the 160.00 level.
European stocks were slightly lower as investors gauge the latest US inflation data. FTSE100 trimmed yesterday’s gains by -0.43% as bulls struggle to maintain gains above the 7500 level. Bears may target the 7400 level if 7450 near-term support fails to hold. Upside targets are at 7600 psychological level.
DAX dropped by -0.13% as 13750 resistance continues to hold, and the next critical levels are 13400 support and 14000 psychological resistance. CAC40 sank by -0.32% from the 6570-resistance level and bears could target the 6400 level.
US stock futures extended gains into the bullish territory lifted by earnings season. S&P500 futures were up +0.18% as bulls break above the 4200, a 4-months high. The next critical levels are the 4400 and 4550, short-term barriers. Nasdaq100 futures rose +0.21% and broke into bullish territory above the 13000 and the next key resistance is at the 14000 psychological barriers.
DJIA index futures gained +0.28% ahead of US PPI data. Upside gains are capped by the 33500 level and a break above the near-term resistance could trigger extended targets towards the 34000 psychological level.
Gold was steady at -0.04% after trading slightly above the 1800 psychological level on Wednesday. A break above that near-term high could reinforce a bullish outlook as markets price in a Fed pivot on the interest rate cycle. The upside gains are at 1810 and 1820 levels while a break below 1750 could invalidate the near-term bullish outlook.
