Forex News Roundup for 25th July, 2023

My FX List
July 25, 2023
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Forex News
  • The eurozone business downturn has worsened, raising concerns of a potential recession. The UK economy is also facing a sharp contraction in business activity. The eurozone economy may escape recession, but the recovery is expected to be slow. The Bank of England may resort to additional measures to prevent a recession. The EU’s external trade is crucial for GDP growth, and the economic crisis has impacted pension systems in the Member States.
  • Gold prices rebounded from an over one-week low and climbed back above $1,960. Because of the weaker dollar, bullion became more affordable to holders of other currencies, and the metal was poised for a third weekly gain due to Fed pause expectations. Gold prices are sensitive to interest rate hikes, inflation, and the value of the dollar.
  • The Japanese yen has been sliding ahead of the Bank of Japan’s monetary policy decision. The yen’s value has dropped by over 20% against the dollar over the past year, putting pressure on Japan’s economy. The Bank of Japan is expected to maintain its ultra-low interest rates, which could boost dollar/yen trading. The dollar has been gaining strength against the yen, and the USD/JPY pair looks set to remain firm on the divergence of US/Japanese monetary policy and rising Japanese imports.
  • GBP/USD is under pressure around the 1.2840 mark ahead of the FOMC meeting. The S&P Global Composite PMI showed that US business conditions improved, but the pair struggles to gain ground and remains on the defensive. The ongoing situation may be impacting the GBP/USD exchange rate.
  • China’s state banks are selling dollars both onshore and offshore to defend the yuan. The Chinese currency has weakened to a seven-month low against the US dollar. The People’s Bank of China (PBOC) has promised “comprehensive measures” to prevent wild swings in the exchange rate. The PBOC has tools to stabilize the Yuan and has set higher-than-expected midpoint fixing guidance rates.
  • The Wall Street Journal (WSJ) escalated Binance issues, causing Bitcoin to fall to $29k.
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