Investors are approaching the financial markets with caution following a choppy Monday. Key economic data to be watched on Tuesday includes the second-quarter GDP figures from the Euro area and Germany, as well as the July Consumer Price Index data from Germany. Additionally, in the US, the Conference Board Consumer Confidence Index for July and JOLTS Job Openings data for June will be featured in the economic docket.
The US Dollar has shown strength at the beginning of the week, particularly against the Japanese Yen. The USD Index climbed to its highest level in nearly 20 days on Monday, and closed in positive territory. In the European morning on Tuesday, US stock index futures are trading marginally lower, while the USD Index clings to modest daily gains above 104.50. Meanwhile, the benchmark 10-year US Treasury bond yield remains slightly below 4.2%.
Data from Australia showed a decline in Building Permits by 6.5% on a monthly basis in June. This was worse than market expectations and follows a 5.7% increase recorded in May. The AUD/USD pair showed no significant reaction to this data and was last seen trading marginally higher above 0.6550.
The EUR/USD pair came close to 1.0800 on Monday but managed to find support. It is currently fluctuating in a tight range around the 1.0800 level in the early hours of Tuesday. GBP/USD staged a late rebound on Monday after falling towards 1.2800, closing flat slightly above 1.2850. USD/JPY, on the other hand, gathered bullish momentum in the Asian session on Tuesday, up more than 0.6% at 155.00.
Gold prices remained steady on Monday amid low activity in US Treasury bond yields. Early on Tuesday, XAU/USD was holding onto small daily gains around $2,390. Its movement is impacted by factors such as interest rates, inflation, and economic growth. Higher GDP growth rates are generally negative for Gold prices as they increase the opportunity costs of holding Gold compared to other investments.
Gross Domestic Product (GDP) measures the rate of growth of a country’s economy over a given period, usually a quarter. Annualized quarterly GDP figures can be misleading if temporary shocks impact growth in one quarter but are unlikely to last all year. A higher GDP result is positive for a nation’s currency as it reflects a growing economy that is likely to attract foreign investment and produce exports. On the other hand, a fall in GDP is usually negative for the currency.
