investingLive European markets wrap: Dollar extends post-Fed drop, BOE keeps bank rate unchanged
Headlines:
- BOE leaves bank rate unchanged at 3.75% in July meeting, as expected
- USD/JPY stumbles lower in quick drop before slight bounce back
- Why a stock’s biggest decline may not be its best buying opportunity
- The bond market is voting against Warsh. Bond yields hit the highest since 2007
- Eurozone Q2 preliminary GDP +0.4% vs +0.2% q/q expected
- German economy holds up in Q2, posts marginal growth on the quarter again
- French economy bounces back in Q2 but overall momentum remains sluggish
- Italy Q2 preliminary GDP +0.2% vs +0.1% q/q expected
- Spanish economy continues to show added resilience in Q2, with growth conditions beating estimates
- Germany inflation seen picking up again in July as state readings accelerate
- Spain inflation estimated to accelerate further in July
- What’s the FX signal this month-end?
Markets:
- WTI crude down 1% to $83.58
- NZD leads, USD lags on the day
- European equities higher; S&P 500 futures up 0.6%
- US 10-year Treasury yields little changed at 4.68%
- Gold up 0.3% to $4,078
- Bitcoin up 2.0% to $64,756
It was a mixed and more pensive session as markets continue to digest the FOMC meeting from yesterday, more specifically Fed chair Warsh’s perplexing press conference.
The dollar was seen recovering some ground initially but fell back after, with USD/JPY seeing a quick and sudden drop from 163.30 to 162.28. The currency pair rebounded after to settle closer to 163.00 now but the dollar continues to hold lower after erasing the advance from earlier in the day.
And that comes despite the pressure continuing on the bond market. 10-year Treasury yields nudged higher early on and briefly touched 4.71% before settling back a little to around 4.68% on the day. Still, this remains a key spot to watch as it will have broader market reverberations if the selloff continues. Perhaps after we are done with month-end shenanigans?
In terms of events on the economic calendar, the BOE policy decisionw as the main event but it was more or less as expected. The central bank kept the bank rate unchanged while keeping the door open for rate hikes in the future, but signaling that they are not rushing for now.
Besides that, euro area economic data reaffirmed more resilience in Q2 growth conditions but July inflation numbers are starting to add pressure for the ECB to move again in September next.
In other markets, oil prices are slightly lower with WTI crude down 1% to $83.58. That as traders remain unfazed as the US-Iran conflict continues to rage on for now.
Meanwhile, equities are showing some signs of life late on in the month. European indices are pushing higher with the DAX up 0.2% and CAC 40 up 1.0% on the day. Looking to US futures, tech shares are bouncing back in being led by Microsoft (up nearly 10% in pre-market) after the firm helped to ease anxiety on AI capex spending.
Looking to precious metals, gold is up 0.3% to $4,078 with silver up 0.7% to $58.07 on the day.
This article was written by Justin Low at investinglive.com.