Here is what you need to know on Wednesday, July 31st:
– All eyes are on the Federal Reserve. The world’s most powerful central bank is set to cut interest rates for the first time in over a decade. The move will likely be a one-off amid lower inflation and trade tensions and not the beginning of a long cycle of rate cuts as most data points have been upbeat. Fed Chair Jerome Powell’s message on future moves will determine the next moves. President Donald Trump has repeated his calls for the Fed to enact a massive rate cut.
– The latest data has been mixed with the Core PCE – the Fed’s preferred inflation gauge – missed with 1.6% YoY while the CB Consumer Confidence beat with 135.7 points. The ADP Non-Farm Payrolls will likely shake markets ahead of the Fed, serving as a hint toward the official NFP on Friday.
– US-Sino trade talks continue in Shanghai on the background of Trump’s comments that “China is ripping us” and his boasts that the world’s second-largest economy has lost millions of jobs due to tariffs.
– EUR/USD has advanced despite a small miss on German HICP inflation. Today we will learn about euro-zone inflation in July and GDP in the second quarter. Both are expected to decline in comparison to June.
– GBP/USD has been stabilizing above 1.2100 after tumbling down some 250 pips in two days. PM Boris Johns has maintained his tough rhetoric and told the EU the ball is in their court regarding the Brexit accord. Johnson wants to renegotiate the controversial Irish backstop and the EU refuses.
– Australian second-quarter inflation came out at 0.6% on the headline and 0.4% on the core, an increase in comparison to the first quarter and supporting the Aussie improving its position.
– The Canadian dollar is holding its ground as oil prices edge up and ahead of Canada’s GDP report for May.
– Cryptocurrencies are moving higher, but Bitcoin remains below $10,000 after the US Senate held a hearing on blockchain technology.
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