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Currency Market Analysis

Jul 22, 2019 | Currency Market Analysis

Global Themes

US economic data in focus with Fed meeting approaching

US economic data will dominate the spotlight this week for markets, including second quarter GDP on Friday which is expected to confirm a slowing to 1.8% from the first quarter’s 3.1% pace. On Thursday, durable goods are reported and will include an update on businesses investment.

There will be no Fed speakers this week, after a chorus of central bank officials in the past fortnight, including Fed Chair Jerome Powell. The most impactful comments came last Thursday from New York Fed President John Williams, who set off a debate about how much the Fed could cut rates at its July 30-31 meeting — 25 or 50 basis points. Fed funds futures are predicting a 43% chance of a 50 basis point cut in July, after shooting as high as 70% Thursday afternoon after Williams’ comment that the Fed must “act quickly to lower rates at the first sign of economic distress”.

Stocks post worst week since May

Stocks fell on Friday and posted weekly losses as investors digested a plethora of corporate earnings reports and tensions in the Middle East. In a worrying sign for equities, a number of better-than-expected earnings failed to support the major averages.

The S&P 500 closed 0.6% lower at 2,976 while the Nasdaq Composite slid 0.7% to 8,146. The Dow Jones Industrial Average fell 0.3% to close at 27,154 after rising more than 100 points earlier in the session. The indexes lost most of their earlier gains after Iran said it captured a British oil tanker.

For the week, the S&P 500 and Nasdaq fell more than 1% each, posting their biggest weekly loss since late May, while the Dow lost 0.6%. Remarkably, the indexes’ weekly losses come after reaching all-time highs earlier in the week.


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