The financial markets have once again experienced volatility following the release of a series of stronger-than-expected economic data from the United States. Durable Goods Orders rose by 2.9%, surpassing negative projections. The GDP for the second quarter grew by 3.8%, exceeding the anticipated 3.3%, while unemployment claims dropped to 218,000, which was better than the estimated 240,000. This data reaffirms that the U.S. economy remains robust, despite early signs of a slowdown in the labor sector.
Meanwhile, the views among Federal Reserve officials remain divided. Some, like Stephen Miran and Michelle Bowman, argue that the labor market is becoming increasingly fragile, suggesting a continued interest rate cut. Conversely, Jeffrey Schmid and Austan Goolsbee underscore the risk of persistent inflation. This divergence in perspectives keeps the focus on the Fed’s policy decisions among market participants.
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GOLD
Gold prices managed to hold steady despite the positive economic indicators from the U.S. On Thursday, Gold closed at $3,748 per troy ounce. FedWatch indicates that 86.6% of market participants still anticipate that the Fed will lower interest rates to a range of 3.75%–4%, providing support for Gold prices.
Looking ahead, Gold could continue to experience volatility, caught between the euphoria of U.S. economic data and the lingering possibility of a rate cut.
OIL
Oil prices saw a continued upward trend on Thursday, marking a three-day gain streak. Prices closed at $65.20 per barrel, with the main supporting factor being the anticipated recovery of the U.S. economy, which is expected to boost energy demand.
Additionally, global geopolitical tensions threatening supply have also bolstered prices. The combination of these two factors could continue to drive Oil prices higher in the short term.
EURUSD
The EURUSD currency pair experienced a sharp decline on Thursday, correcting by 73 pips. The strengthening of the U.S. dollar, supported by solid economic data, was the primary catalyst for this drop.
Bearish pressure may persist throughout the day, given the lack of significant data releases from the Eurozone and the strong bullish bias of the U.S. dollar.
GBPUSD
In line with EURUSD, GBPUSD also faced significant selling pressure, closing at its lowest level in two weeks at 1.3336. Better than expected U.S. economic data was the main factor contributing to the weakness of the British pound.
GBPUSD could face further pressure leading into the European session today, amid the strength of the U.S. dollar and dovish expectations from the Bank of England.
USDJPY
The USDJPY pair closed higher on Thursday at 149.721. The demand for the U.S. dollar following the release of solid American economic data pushed this pair higher.
The bullish momentum for USDJPY is likely to continue into the European session, bolstered by positive sentiment towards the U.S. dollar.
NASDAQ
The Nasdaq index closed lower on Thursday, pressured by a mix of strong U.S. economic data and selling pressure in technology stocks. Lower unemployment claims and upwardly revised GDP growth raised concerns that the Fed may delay interest rate cuts, which is seen as less supportive for tech stocks.
Additionally, sell-offs in AI-focused stocks like Oracle and Meta due to worries over overvaluation exacerbated the pressure. This situation could continue to hinder the Nasdaq’s movement during the European session.
