The US dollar rose to a two year high on Friday. Month-end flows alongside some positive economic data from the US added to the optimism. The US personal consumption expenditure saw a 0.6% increase in July. The data underscored the resilience of the consumer. However, household income growth slowed significantly during the month. After rising 0.5% in June, household income grew just 0.1% in July.
Euro Tumbles to a Two-Year Low
The euro currency fell to 1.1098 on Friday, a two-year low. The declines came as data from the eurozone continued to deteriorate. This raises the prospects for the ECB to announce its stimulus plans when it meets on September 12th. The ECB has already pledged its commitment to start the QE program. But the size and scope of the stimulus plan is the subject of speculation.
EURUSD to Remain Subdued into ECB Meeting
The common currency is unlikely to make any major advances in the next week. This comes as traders line up ahead of the ECB’s monetary policy meeting. The current lows are likely to hold for the moment. As a result, EURUSD could be trading subdued below the resistance area of 1.1030.
Sterling Muted as Scottish Courts hear out the Brexit case
The pound sterling was muted on Friday. This came amid news reports that the Scottish courts agreed to hear the UK lawmakers case against PM Johnson’s move to dissolve the parliament before the Oct 31stBrexit deadline. The Scottish court, however, rejected the plea by lawmakers for an interim injunction. A full hearing on the issue is slated for September 3rd.
GBPUSD Testing Support. Will Gains Follow?
The currency pair settled near the support area of 1.2170 on Friday. This comes as price retested the support area more firmly. A rebound off this level is required in order for GBPUSD to push higher. The initial target will be previous highs at 1.2295. A close above this high will open GBPUSD to further potential gains.
Gold Marks First Weekly Decline in Four Weeks
The precious metal closed last week on a bearish note. This was the first weekly decline after four consecutive weekly gains. However, the bearish close in gold came as price tested a new six-year high at 1555.00 an ounce. Gold prices weakened modestly as the US dollar surged once again.
XAUUSD Likely to Correct Lower in the Near Term
The precious metal is expected to post a correction lower in the short term. Price action is likely to see gold testing the lower support at the psychologically crucial 1500 mark. A breakdown below this level could indicate further declines. The next main support area is seen at 1485 upon a successful close below the 1500 region.