The US dollar starts the week on the back foot after July US retail sales fell for the first time in nine months, prompting markets to scale back expectations for a September Fed rate increase. Gold is up around 0.4–0.5% this morning, trading near $4,407 as a weaker USD and softer Fed expectations provide renewed support. Euro is firmer this morning and trading around 1.16050, benefiting primarily from broader weakness in the US dollar. Bitcoin is up around 0.8–1% this morning and trading close to $63,500, supported by a modest improvement in broader risk sentiment.
- The USD remains moderately soft unless incoming data gives markets a reason to rebuild expectations for September tightening.
- Meanwhile, gold is trading close to its recent two-month highs, meaning the risk of further profit-taking increases as prices advance.
- Attention will also shift towards the eurozone this week, with fresh inflation figures providing another important indication of the ECB’s likely policy path.
- After several weeks of weakness, BTC still needs sustained demand to break out of its short-term consolidation and return control to buyers.
FX Snapshot
XAUUSD
The bias remains moderately bullish, although a sustained move higher will require another reason for markets to question the strength of the US economy.
EURUSD
The pair keeps a moderately bullish bias, but further gains will increasingly depend on the eurozone data rather than the greenback’s weakness alone.
BTC
Bitcoin faces a cautious recovery, but without a confirmed range breakout it remains vulnerable to another reversal.
Market sentiment
Markets begin the week in relatively calm conditions, but with a clear shift away from expectations of further Fed tightening. Weak retail sales and softer consumer data have made a September rate increase considerably less likely.
This week’s key events are UK and eurozone inflation, the minutes from the Fed’s July meeting and preliminary August PMI figures.
