Market Volatility Expected to Heighten on Key Macroeconomic Events
As investors brace for a potentially volatile midweek, key macroeconomic events are set to drive market movements. S&P Global is scheduled to release preliminary July Manufacturing and Services PMI data for Germany, the Eurozone, the UK, and the US on Wednesday. Additionally, the Bank of Canada (BoC) will announce its monetary policy decisions during American trading hours. The US economic calendar will also feature Goods Trade Balance and Wholesale Inventories for June.
The US Dollar (USD) has been a standout performer this week, with the currency strengthening against its major rivals. The USD Index closed at its highest level in nearly two weeks on Tuesday, hovering around 104.50. Despite this, US stock index futures are down between 0.4% and 0.9% early Wednesday, while the benchmark 10-year US Treasury bond yield remains above 4.2%.
The BoC is widely expected to cut the policy rate by 25 basis points to 4.5%. Following the rate decision announcement, BoC Governor Tiff Macklem will provide insights on the policy outlook at a press conference. The USD/CAD pair has been on an upward trend, trading at its highest level since mid-April near 1.3800.
Meanwhile, EUR/USD and GBP/USD are facing bearish pressure, with both pairs trading below key levels. AUD/USD dropped below 0.6600 for the first time in over a month after Australia’s Judo Bank Composite PMI edged lower in July.
USD/JPY continues to face bearish pressure, trading at its lowest level since mid-May near 154.50. Gold, on the other hand, regained strength and closed above $2,400 on Tuesday, with XAU/USD edging higher towards $2,420 early Wednesday.
In the world of financial jargon, the terms “risk-on” and “risk-off” play a crucial role in determining market sentiment. During “risk-on” periods, stock markets rise, commodities gain value, and certain currencies strengthen. Conversely, in “risk-off” markets, investors opt for safer assets like Bonds and Gold.
Overall, market participants are closely monitoring these key events and data releases to navigate the heightened volatility and make informed trading decisions.
Source: https://www.fxstreet.com/news/forex-today-boc-rate-decision-pmi-data-to-grab-market-attention-202407240656
