US dollar rises on Chicago PMI data release, with profit taking and month end rebalancing ensuing.

The forex landscape has changed a bit since this morning, but the Aussie remains weak at least. The US dollar caught a bid this afternoon which is seeing major crosses undo most of yesterday’s ranges.


Market Wrap




The US session has seen a turnaround in the markets as we come to the end of this month's trading, following this morning’s European Unemployment data and worse than expected US Core PCE data in the afternoon.




Personal consumption expenditures (PCE) in the United States rose by $155.4 billion in June compared to May. The Core PCE price index was 0.4% higher from May and increased by 3.5% year-over-year whereas analysts had predicted a rise to 3.7%. The miss will increase the resolve of the Feds narrative of inflation being transitory.


The report showed that, in June, personal income grew by $26.1 billion.


"While most consumers still expect inflation to be transitory, there is growing evidence that an inflation storm is likely to develop on the not-too-distant horizon," Surveys of Consumers Chief Economist Richard Curtin noted in the report.


The US Chicago PMI for July came in above the market analysts’ highest predictions at 73.4, which is a big jump from the previous reading of 66.1, and on this data, the US dollar caught a bid, and the US dollar index rose.


Apple, Microsoft, Google, Facebook, and Amazon Shares are bringing Wall Street lower along with the rest of the world's indices it would seem. Amazon failed to reach projections for its revenue, prompting JPMorgan Chase & Co. to reduce the e-commerce giant's target price. From the start of the US session, the Nasdaq has dropped -0.56% but is still marginally up from the close yesterday.


The chart above shows how the daily 20, 50, and 200 exponential moving averages, time and time again are great places to anticipate a buy the dip opportunity. Waiting for price to reach these levels and then turning to a smaller time frame to reduce your risk is proving to be a great way to trade currently, as the moves are extending with momentum to the upside, and we trend higher.


The euro has found it hard to maintain any semblance of bullishness today after the German Q2 GDP rose 1.5% in the second quarter of 2021 compared to the previous three-month period, according to a preliminary estimate from the country's statistical office Destatis. Market analysts had been expecting 2.0% with some estimates as high as 2.9%.


Gross domestic product (GDP), 2nd quarter of 2021

+1.5% on the previous quarter (price-, seasonally and calendar-adjusted)

+9.6% on the same quarter a year earlier (price-adjusted)

+9.2% on the same quarter a year earlier (price- and calendar-adjusted)


This morning I put out a video regarding the GBPAUD and how I was expecting a breakout to the upside based on the relative strength in the pound versus the Aussie, but also because we had been consolidating for several sessions. I am glad to say the initial entry has worked and things are looking like they may play out as planned.


Next week is a new month, it is also probably the quietest as a lot of traders are on holiday. If we do get slow markets, reducing your risk and time frames is probably a good idea. Waiting for those high probability entries and being disciplined in your approach is key.


The Jackson Hole symposium, RBNZ meeting possibly the Bank of Canada will be a few things to look forward to as possible volatility-inducing events.

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