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TD Securities notes that the UK Composite PMI climbed back into expansion at 52.1 in July, led by Manufacturing strength and a Services PMI recovery to 51.8. Input cost inflation eased and business confidence hit its highest since February. Retail Sales also surprised to the upside, rising 1.0% month-on-month in June versus a market expectation of a decline.

Activity and spending show renewed strength

"The UK Composite PMI rose to 52.1 from 49.3, returning to expansion territory for the first time since April."

"Manufacturing led the recovery, with output growing and new orders recording their strongest increase since February 2022, supported by AI investment, data-centre supply chains, defense spending, and stronger exports."

"The Services PMI increased to 51.8, returning to growth for the first time since April as consumer-facing sectors and hospitality activity improved.Input cost inflation eased to a five-month low, while business confidence climbed to its strongest level since February, reflecting improving demand conditions and AI-related investmentLastly, retail sales rose 1.0% m/m in June (mkt -0.3%)."

"The strong number primarily came on the back of summer shopping amidst the heatwave and earlier timing for online discounting."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• AUD/USD edges higher near 0.6990 as the US Dollar struggles for direction following mixed US business-activity data.
• US Manufacturing PMI eased to 53.8 and missed expectations, while Services PMI surged to 53.6.
• Markets await next week’s Fed decision with attention focused on Chair Kevin Warsh’s guidance.

AUD/USD trades higher near the 0.6990 area on Friday, recovering from an earlier pullback as the US Dollar (USD) struggles to gain clear momentum following mixed United States (US) business-activity data.

The preliminary S&P Global Manufacturing Purchasing Managers Index (PMI) eased to 53.8 in July from 53.9, missing the market forecast of 54.5. In contrast, the Services PMI climbed sharply to 53.6 from 51.2, significantly exceeding expectations of 51.0. The figures showed that manufacturing momentum weakened slightly, while activity in the dominant services sector accelerated.

The strong services reading may keep United States (US) Treasury yields supported and limit the Australian Dollar’s recovery. However, the manufacturing disappointment and broader USD consolidation have allowed AUD/USD to regain some ground, with the 4-hour chart showing a modest rebound from recent lows.

Investors will now turn their attention to next week’s Federal Reserve (Fed) meeting on July 28–29. The Fed is widely expected to leave interest rates unchanged at 3.50%–3.75%. As this meeting will not include a Summary of Economic Projections (aka an updated dot plot), the main focus will be on the policy statement and Fed Chair Kevin Warsh’s press conference.

Warsh’s language on elevated inflation, resilient economic activity, and the impact of higher energy prices will be crucial. A hawkish message suggesting that further interest rate increases remain possible could strengthen the Greenback and pressure AUD/USD.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6988, hovering in a tight range with a neutral near-term bias. The pair holds above the longer-term 100-period Simple Moving Average (SMA) at 0.6964, which underpins the broader recovery, but trades just under the 20-period SMA at 0.6993, highlighting a lack of directional conviction. The Relative Strength Index (RSI) sits just below the 50 line, hinting that upside momentum has cooled and that the market is consolidating after recent gains.

On the topside, immediate resistance emerges at 0.6990, followed by the 20-period SMA at 0.6993 and then the horizontal barrier at 0.6995, where a clear break would open the way for a more decisive bullish extension. On the downside, initial support is seen at 0.6983, ahead of the intraday floor at 0.6973, while the 100-period SMA at 0.6964 remains a key structural backstop that would need to give way to signal a deeper corrective phase.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Scotiabank strategists Shaun Osborne and Eric Theoret note the Japanese Yen (JPY) is slightly firmer versus the US Dollar (USD) but still underperforming most G10 currencies. USD/JPY trades near levels last seen in 1986, with limited resistance overhead. Markets price little Bank of Japan (BoJ) tightening for July and September, so a hawkish hold next week could surprise and trigger Yen strength after recent Ministry of Finance (MoF) intervention warnings.

Yen stabilizes before key BoJ decision

"The yen is showings signs of short-term stabilization just above Thursday’s fresh multi-decade low, buoyed by the softness in the broader USD with little attributable to ongoing official commentary from the MoF."

"Finance Minister Katayama continues to speak of ‘bold action’, threatening intervention however the market appears to have offered no meaningful reaction in the currency. "

"Fundamental risk lies with the BoJ next week, where policymakers have recently offered their own attempt at support with talk of a faster than expected tightening path."

"Markets are currently pricing little for the July 31 meeting and only 10bpts for September 18. A hawkish hold next week could deliver an important surprise and fundamentally-driven yen strength."

"For now, in USD/JPY, we see little in terms of resistance as the cross hits fresh multi-decade highs at levels last seen in 1986."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

MUFG’s Derek Halpenny highlights that rising US and global bond yields, elevated geopolitical risks and higher energy prices are supporting the US Dollar. He notes that expectations of a possible Federal Reserve rate hike are encouraging further Dollar buying, while the global rates backdrop and the BoJ’s gradual policy normalisation are likely to allow further gains in USD/JPY. The DXY’s previous high at 101.80 is now in sight, with a break above that level providing another bullish signal.

Rising yields and geopolitics back Dollar

"UST bond yields jumped notably yesterday with the OIS market indicating the probability of a rate hike by the Fed next week remains around 35%. Yields in Japan continued to grind higher today even with the underlying core-core nationwide CPI annual increase being slightly weaker than expected at 1.7% in June. However, it is the underlying adjusted measure that excludes temporary distortions from policy changes and other special factors that needs monitoring and that stands at 2.7% in May."

"The US Treasury semi-annual report, released yesterday, did not cite any country for currency manipulation but did reference the undervaluation of the yen noting that “monetary policy normalisation would help anchor inflation expectations and reduce excessive rate volatility”. The US certainly wants the BoJ to hike but a continued slow grind higher in USD/JPY will likely continue given the global rates backdrop due to higher energy prices."

"Yields are also higher in Japan and globally due to the fears of a further escalation in the conflict over the weekend with Axios reporting that President Trump is considering a “massive attack” and that he was “close to making a decision”. That suggests an attack over the weekend is high. The US dollar buying momentum looks likely to continue into the weekend."

"A big attack before the FOMC on Wednesday that sees crude oil prices further higher could result in further positioning for an FOMC hike next week. (we see it as very unlikely)."

"The previous high for DXY at 101.80 is now in sight and a break there would be another bullish sign."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Brown Brothers Harriman’s (BBH) Elias Haddad reports that EUR/USD has recovered part of its recent slump but remains below 1.1400. A stronger-than-expected Eurozone July PMI and a hawkish hold from the ECB support the Euro, though higher Oil prices keep growth risks skewed lower. Markets price around 75 bps of ECB tightening over the next year, seen limiting Euro downside rather than driving sustained gains.

Stronger PMI and ECB path support Euro

"EUR/USD recovered some of yesterday’s slump but is holding under 1.1400. The Eurozone July PMI was a lot stronger than anticipated. The composite PMI increased to a five-month high at 51.9 (consensus: 50.2, prior: 50.0) reflecting both a recovery in services business activity and a faster expansion in manufacturing production."

"Nevertheless, renewed oil price gains keep the risks tilted toward weaker Eurozone growth and higher inflation. That limits EUR/USD relief rallies."

"ECB delivered a hawkish hold yesterday. As was widely expected, the ECB left the policy rate unchanged at 2.25%. ECB President Christine Lagarde said the decision was unanimous, although some governors asked themselves whether a rate hike should be considered."

"The ECB is on track to lift rates 25bps at the next September 10 meeting (90% priced in). Over the next twelve months, the swaps curve implies nearly 75bps of tightening to 3.00%. That would leave the policy rate at the top of the ECB’s estimated neutral range (1.75%-3.00%)."

"Tighter monetary policy when the Eurozone economy is still operating below potential is more likely to limit EUR downside than push the currency higher because it raises the likelihood of a downward adjustment to ECB rate expectations."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• EUR/USD pares gains as a firmer US Dollar caps the upside.
• Strong US business activity, elevated Oil prices and new tariffs keep inflation risks in focus.
• Upbeat Eurozone PMI data and prospects of a September ECB hike offer limited support to the Euro.

EUR/USD pares earlier gains on Friday as the widening Middle East war and hawkish Federal Reserve (Fed) expectations keep the US Dollar (USD) pinned near recent highs. At the time of writing, the pair trades around 1.1377, hovering near a three-week low after retreating from an intraday high of 1.1401.

The Greenback also draws support from stronger business activity data. The preliminary S&P Global Composite Purchasing Managers’ Index (PMI) rose to an eight-month high of 53.6 in July from 51.9 in June, while the Services PMI climbed to 53.6 from 51.2. The Manufacturing PMI edged down to 53.8 from 53.9.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 101.42, recovering from an intraday low of 101.25.

Meanwhile, West Texas Intermediate (WTI) is up nearly 8% this week as the Middle East war threatens shipping through two major energy routes, the Strait of Hormuz and Bab el-Mandeb. Elevated Oil prices keep inflation risks alive and reinforce expectations that the Fed may need to raise interest rates.

Trade tensions also add to the inflation concerns after the United States (US) imposed new tariffs of 10% and 12.5% on imports from 60 trading partners on Friday.

According to the CME FedWatch Tool, markets now see an 80% chance of a rate hike in September, while the Fed is widely expected to keep interest rates unchanged at its July 28-29 meeting.

The Euro (EUR) initially drew support from stronger-than-expected Eurozone business activity data. The preliminary HCOB Composite Purchasing Managers’ Index (PMI) rose to a five-month high of 51.9 in July from 50.0 in June, beating the market forecast of 50.2. The Services PMI climbed to 51.6 from 49.4, while the Manufacturing PMI increased to 52.0 from 51.4.

EUR front-end supported as ECB keeps September hike option open

According to TD Securities, the ECB “left the deposit rate on hold at 2.25%,” with the statement and press conference continuing to flag “inflationary pressures” and to stress the need for a “meeting-by-meeting approach,” thereby “leaving the door open for a September hike.” The bank notes that the immediate “market reaction was fairly muted,” and on the rates side it therefore “favour[s] a long bias for EUR front-end.” In foreign exchange, TD Securities observes that “EURUSD was muted on unchanged ECB guidance,” while “near-term EUR downside pressure stays.”

• USD/CAD trades around 1.4095 on Friday, up a modest 0.06% at the time of writing.
• July US PMI data points to stronger business activity, supporting the US Dollar.
• Canadian producer and raw material prices decline sharply, while lower Oil prices continue to weigh on the Canadian Dollar.

USD/CAD trades around 1.4095 on Friday at the time of writing, up a modest 0.06% as the US Dollar (USD) retains a slight advantage following the release of solid US economic data, while the Canadian Dollar (CAD) remains pressured by weak domestic indicators and softer Oil prices.

The United States (US) S&P Global Composite Purchasing Managers Index (PMI) rose to 53.6 in July from 51.9 in June, signaling an acceleration in private sector activity. The Services PMI improved to 53.6, while the Manufacturing PMI eased slightly to 53.8 from 53.9. According to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, the survey is consistent with annualized Gross Domestic Product (GDP) growth of around 2% in the third quarter, although supply chain disruptions and price pressures continue to intensify.

The stronger-than-expected data highlights the resilience of the US economy and helps support the US Dollar, although the immediate market reaction remains limited. Investors are now focused on next week's Federal Reserve (Fed) policy meeting for further guidance on the monetary policy outlook.

In Canada, Friday's data pointed to renewed weakness in producer prices. The Industrial Product Price Index fell 1.4% MoM in June after a revised 1.4% increase in May, while the Raw Material Price Index dropped 6.9%, well below market expectations. These figures add to the recent softer inflation data, reinforcing expectations that the Bank of Canada (BoC) could maintain a more accommodative policy stance than the Fed.

Meanwhile, lower Oil prices continue to cap support for the Canadian Dollar. The weakness in the energy market, combined with diverging monetary policy expectations between the Bank of Canada (BoC) and the Federal Reserve (Fed), as well as uncertainty surrounding the Trump administration's new tariffs, continues to provide a mildly supportive backdrop for USD/CAD in the near term.

CAD steadies as modestly better fundamentals offset trade tension overhang

Strategists at Scotiabank observe that the Canadian Dollar is essentially unchanged on the day, noting that “the CAD is all but flat on the session.” They judge the backdrop to be “a little more positive for the CAD in late week trading as US yields edge off their highs and front-end spreads narrow,” but caution that sentiment remains fragile. In their view, “the CAD may still struggle to gain support as trade tensions linger,” with PM Carney signalling that Canada is “weighing all options for possible retaliation if there is no agreement to avoid 50% tariffs next month.” From a technical standpoint, Scotiabank maintains a “neutral—there is still no real change in the CAD’s technical condition” stance, highlighting that “spot is pivoting around the 40-day MA (which has nudged up to 1.4081 this morning) and it remains well below USD resistance at 1.4125 and above initial support at 1.4060.”

Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) is little changed against the US Dollar (USD), with slightly better fundamentals as United States (US) yields ease and spreads narrow. However, ongoing tariff uncertainty and comments from PM Carney on potential retaliation keep USD/CAD supported. Technically, the pair pivots around its 40-day moving average, with resistance near 1.4125 and support around 1.4060.

CAD steady with technical range intact

"The CAD is all but flat on the session. The fundamental backdrop for the CAD is a little more positive for the CAD is late week trading as US yields edge off their highs and front-end spreads narrow."

"But the CAD may still struggle to gain support as trade tensions linger. PM Carney said Canada is weighing all options for possible retaliation if there is no agreement to avoid 50% tariffs next month."

"Neutral—There is still no real change in the CAD’s technical condition."

"Spot is pivoting around the 40-day MA (which has nudged up to 1.4081 this morning) and it remains well below USD resistance at 1.4125 and above initial support at 1.4060."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Rabobank’s Stefan Koopman expects the Bank of England (BoE) to keep Bank Rate at 3.75% on 30 July and unchanged through 2026, even as markets still price some chance of further tightening. Softer United Kingdom (UK) inflation, easing wage growth and weak activity data argue against hikes, but higher energy prices and geopolitical risks keep upside inflation pressures and the possibility of a later rate increase alive.

BoE seen on prolonged policy hold

"We expect the Bank of England MPC to leave Bank Rate unchanged at the 30 July meeting. Over the past five months, policy expectations have been outsourced almost entirely to events in the Middle East. The optimism of late May and early June has proved a false dawn, with only a limited trigger needed for Iran-US hostilities to resume."

"That gives the MPC room to hold rates. Bank Rate is already restrictive at 3.75%, the labour market is softening, and inflation expectations remain contained. For Governor Bailey and the centre of the Committee, that should be enough to resist another hike for now."

"We therefore still expect Bank Rate to remain on hold through the rest of the year. The risk is skewed towards a hike if energy prices stay high, but that would come at a cost. Tightening into a soft economy would raise the odds that the Bank has to reverse course next year."

"The key question is whether he stretches his reaction function once more now that energy risks have re-intensified, or whether he gives more weight to inflation persistence. That would increase the odds of a September rate increase."

"We therefore expect monetary policy to respond only if a lasting energy shock starts to feed into wages, prices or expectations. That has not happened yet. But the MPC is running out of cover."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• Gold steadies after Thursday’s sharp decline as the US Dollar and Treasury yields ease.
• Elevated Oil prices and new US tariffs keep inflation concerns and Fed rate-hike expectations in focus.
• XAU/USD holds above $4,000, but the technical outlook stays bearish below the Bollinger middle band.

Gold (XAU/USD) steadies on Friday after falling nearly 2% the previous day, as surging Oil prices fueled expectations that the Federal Reserve (Fed) may need to raise interest rates amid a worsening inflation outlook. At the time of writing, XAU/USD trades around $4,065 after hitting an intraday low of $4,022.

A pullback in Oil prices weighs modestly on the US Dollar and pushes US Treasury yields slightly lower, lending some support to the precious metal, which typically moves inversely to both. Still, the upside remains limited as market sentiment stays tied to the hawkish Fed narrative, while the prospects for peace in the Middle East appear slim in the near term.

According to the CME FedWatch Tool, markets now see a 78% chance of a rate hike in September, while the Fed is widely expected to keep interest rates unchanged at its July 28-29 meeting.

The latest US economic data reinforces the hawkish outlook. The preliminary S&P Global Composite Purchasing Managers Index (PMI) rose to an eight-month high of 53.6 in July from 51.9 in June, while the Services PMI climbed to 53.6 from 51.2. The Manufacturing PMI edged down to 53.8 from 53.9.

Trade tensions also add to the inflation concerns after the United States (US) imposed new tariffs of 10% and 12.5% on imports from 60 trading partners on Friday.

On the geopolitical front, the US military completed its 13th consecutive night of strikes on Iran. Meanwhile, US President Donald Trump told Axios that he was “considering a massive attack” and was “close to making a decision.” Iran has also targeted US military bases in Jordan and Bahrain.

The war is now threatening two major energy-shipping routes, the Strait of Hormuz and Bab el-Mandeb, raising the risk of prolonged supply disruption and keeping Oil prices elevated.

West Texas Intermediate (WTI) rallied 6% on Thursday, briefly climbing above $92.00. At the time of writing, WTI trades around $88.50, hovering near its highest level in more than a month.

Analysts at ING note that “despite ongoing geopolitical risks, gold has struggled to attract meaningful safe-haven demand since the conflict began,” with investor attention instead shifting toward “the inflationary implications of higher oil prices and the prospect of higher-for-longer interest rates.”

Against this backdrop, Gold’s near-term outlook remains tilted to the downside. However, the yellow metal continues to hold above the psychological $4,000 mark, leaving XAU/USD broadly range-bound between $4,000 and $4,200 for a fifth consecutive week.

Technical analysis: XAU/USD holds firm above $4,000

On the daily chart, XAU/USD maintains a bearish near-term tone, holding near the Bollinger middle band (20-period Simple Moving Average) at $4,069 and well below the 100-day simple moving average near $4,480.

The Relative Strength Index (RSI) hovers below the 50 line, while an elevated Average Directional Index above 35 hints that the prevailing downside phase still carries meaningful trend strength despite recent consolidation.

On the topside, initial resistance is located at the Bollinger middle band around $4,069, with further upside barriers at the upper Bollinger band near $4,180, followed by a more strategic horizontal resistance at $4,350 and the distant 100-day SMA around $4,480.

On the downside, immediate support emerges at the psychological $4,000 mark, followed by the lower Bollinger Band near $3,957. A more substantial demand zone is seen around $3,800, where buyers could step in if the decline extends.

(The technical analysis of this story was written with the help of an AI tool. Know more.)