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Forexlive Americas FX news wrap 3 Jul: USD moves lower helped by weaker ISM data

Oil finishes the day strong to end $1 higher as it caps fourth straight week of gainsBiden says on campaign call that he’s not dropping out – reportFOMC meeting minutes: vast majority saw the growth gradually coolingECBs Stournaras: Two more rate cuts in 2024 seems reasonableAtlanta Fed GDPNow growth estimate for 2Q falls to 1.5% from 1.7%European shares closed today with solid gainsPres. Biden reportedly told ally that he is weighing whether to continue in the raceThe first sign that Biden is seriously thinking of dropping out has emergedUS crude oil inventories show a larger than expected drawdown of -12.157M vs -0.680M est.What happens in markets and politics if Biden drops outECBs Vasle: ECB must be mindful of inflation risks and not rush into next rate cutUS factory goods orders for May -0.5% versus 0.2% estimateISM nonmanufacturing PMI for June 48.8 versus 52.5 estimateS&P global services PMI index for June (final) 55.3 versus 54.8 last monthKickstart the FX trading day for July 3 w/a technical look at EURUSD, USDJPY & GBPUSDECB sources: Policymakers are urging a review of consequences of QE policiesCanada trade balance for May C$-1.93 billion versus C$-1.2 billion estimateUS international trade deficit for May $-75.1 billion versus -$76.2 billion estimateUS initial jobless claims 238K versus 235K estimateADP National employment data for June 150K versus 160K estimateThe GBP is the strongest and the JPY is the weakest as the NA session beginsForexLive European FX news wrap: Dollar lightly changed ahead of ADPUS June Challenger layoffs 48.79k vs 63.82k priorFed’s Williams casts doubt over rise in neutral rateUS MBA mortgage applications w.e. 28 June -2.6% vs +0.8% prior

In the US today,the USD moved lower after weaker ADP payroll data, which was followed later by much weaker ISM non-manufacturing data (48.8 vs 52.5 est) and factory orders (-0.5% vs 0.2% est).

The ISM data was the weakest since the post-pandemic rebound 4 years ago. The employment component was below the 50 level for the 5th consecutive month. New orders tumbles below the 50 level from 54.1 last month to 47.3 this month. five 9 components were below the 50 level.

US yields and the US dollar raced lower after the report with the longer end moving the most. With the US bond market closing early for the US Independence Day holiday, the closing levels showed:

2 year yield 4.707%, -3.1 basis points5-year yield 4.322%, -7.4 basis points10 year yield 4.354%, -8.1 basis points30-year yield 4.523%, -8.6 basis points

Looking at the major currencies the JPY is ending the day as the weakest of the major currencies followed by the USD.

The USDJPY pair initially moved lower after the ISM data with the pair moving to and through the 100-hour MA for the first time since June 14. That should have increased downside momentum – and it did initially – but the fall stalled near the low for the week (Monday) and the price rebounded back higher. When the price moved back above its 100-hour moving average in the low price from yesterday/high price from Friday’s trade at 161.27, sellers turned buyers. The USDJPY remains more bullish technically going into the new day above that level.

For the EURUSD , it extended above a cluster of MAs including the 100 and 200-day MAs at 1.0788 – 1.0792 after the ISM data, with the price running above 1.0800 to a high price of 1.0816. However, buyers turned back to sellers with the price moving back below the aforementioned daily moving averages disappointing the buyers in the process. In the new trading day, the price will need to get and stay above the daily MAs to put the buyers back in full control.

The AUDUSD was one of the days biggest moves helped by risk-on flows from stocks moving higher, and the lower yields. The AUDUSD moved to the highest level going back to January 2024 with the price moving above 0.67134 high from May. However, like the EURUSD and the USDJPY, the dollar selling momentum could not sustained. The price moved back below the May high into the close. In the new day, getting above 0.67134 is needed to increase bullish bias.

The US stocks did move higher once again today with both the S&P and Nasdaq indices closing at new records again. The final numbers are showing:

Dow industrial average fell -23.85 points or -0.06% 39308.01S&P index rose 27.99 points or 0.51% at 5537.01NASDAQ index rose 159.54 points or 0.80% at 18188.30

In other markets as the day comes to a close:

crude oil rose $0.92 after much higher than expected drawdown of oil inventories. The price is trading at $83.72 up 1.11%.Gold rose $25.75 or 1.10% to $2354.87 as it reacted to lower yields and the lower dollar.Bitcoin moved back below the $60,000 level at $59,754. It is the approaching it 200 day moving average at $58,400.

This article was written by Greg Michalowski at www.forexlive.com.

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