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10.07.202311:21 Forex Analysis & Reviews: Markets await latest inflation data in the US

Global stock markets edge lower amid pessimism sparked by the latest Fed minutes and contrasting employment figures from ADP and the US Department of Labor.

Obviously, investors continue to be stirred up by the potential rate hikes by global central banks, primarily the Federal Reserve. The recent private sector employment data from the ADP, which indicated strong growth in new jobs, primarily in the services sector, increased the chances of seeing an increase in rates. However, the situation became uncertain after the US Department of Labor published its official data on the number of new jobs in the non-agricultural sector. Reportedly, employment rose by 209,000, lower than the 225,000 the previous month. Still, this figure remains above the threshold of 200,000, indicating an overall continuing positive pace of employment growth, but with the risk of a significant fall in the future.

The currency and commodities markets reacted to the news rather coolly, effectively confirming the theory that the stabilization of US inflation or the resumption of its growth could force the Fed to continue raising interest rates.

Latest inflation data from China, Germany, and the US lies ahead, but more focus will be given to the consumer price index in the US. Forecast says the overall figure will fall to 3.1% y/y, but increase by 0.3% m/m. Such figures will boost risk appetite, accompanied by a weakening of dollar as treasury yields fall. The chances of seeing further rate hikes will drop as well.

Forecasts for today:

Exchange Rates 10.07.2023 analysis

Exchange Rates 10.07.2023 analysis

EUR/USD

The pair hit 1.0970. Surpassing this level amid a decrease in US inflation will push the quote 1.1100.

GBP/USD

The pair trades at 1.2835. A consolidation above it, which could be spurred by falling US inflation and steady expectations of rate hikes from the Bank of England due to high inflation, may bring the quote to 1.2985.

*A análise de mercado aqui postada destina-se a aumentar o seu conhecimento, mas não dar instruções para fazer uma negociação.

Pati Gani,
Analytical expert of InstaSpot
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