Market Update for August 28th
Here’s a quick overview for Thursday, August 28th:
Investors are currently trading significant currency pairs within established ranges, awaiting new catalysts. Today’s European Economic Docket includes data on business and consumer sentiment for August. Additionally, the first weekly unemployment claims data and revised second-quarter GDP figures from the US will attract particular attention from market participants.
This Week’s US Dollar Overview
The following table illustrates the US dollar’s performance against various currencies this week. Notably, the dollar has been particularly strong compared to the euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.68% | 0.15% | 0.34% | -0.29% | -0.29% | 0.16% | 0.01% | |
| EUR | -0.68% | -0.53% | -0.41% | -0.96% | -0.90% | -0.52% | -0.66% | |
| GBP | -0.15% | 0.53% | -0.02% | -0.44% | -0.43% | 0.01% | -0.14% | |
| JPY | -0.34% | 0.41% | 0.02% | -0.58% | -0.60% | -0.11% | -0.21% | |
| CAD | 0.29% | 0.96% | 0.44% | 0.58% | 0.03% | 0.48% | 0.30% | |
| AUD | 0.29% | 0.90% | 0.43% | 0.60% | -0.03% | 0.45% | 0.30% | |
| NZD | -0.16% | 0.52% | -0.01% | 0.11% | -0.48% | -0.45% | -0.15% | |
| CHF | -0.01% | 0.66% | 0.14% | 0.21% | -0.30% | -0.30% | 0.15% |
The heatmap reflects the rate of change among major currencies, with the base currency listed in the left column and the estimated currency across the top row. For instance, selecting US dollars from the left and moving to Japanese yen will show the rate of change for USD/JPY.
After a bullish trend on Wednesday, the US Dollar index lost some ground in the American session, although the primary Wall Street index still posted slight gains. In the European morning, the USD index stabilized above 98.00 amid mixed trading in US stock index futures.
Recent Australian data indicated a minor uptick in the ANZ Business Confidence Index, rising from 47.8 in July to 49.7 in August. Meanwhile, private capital expenditures saw a modest increase of 0.2% in the second quarter, following a 0.2% drop in the previous quarter—this, however, fell short of the anticipated 0.7% increase. The AUD/USD pair showed a slight upward movement early Thursday, trading above 0.6500.
After dipping to a three-week low near 1.1570, the EUR/USD pair bounced back late on Wednesday and remained largely unchanged, fluctuating in a narrow range around 1.1650 during European trading hours. The European Central Bank is expected to release the minutes from its July meeting later today.
Junko Nakagawa, a member of the Bank of Japan’s Monetary Policy Committee, emphasized that the BOJ will likely continue to raise interest rates if the economic forecasts align on Thursday. Following some indecisive trading on Wednesday, the USD/JPY pair saw sideways movement below 147.50 on Thursday morning.
The GBP/USD has entered a consolidation phase around 1.3500 after previously surpassing recent highs over the last couple of days.
Even with downward revisions in the Wednesday European session, gold regained momentum and registered slight gains, with XAU/USD stabilizing early on Thursday, hovering near the $3,400 mark.
GDP Overview
A country’s Gross Domestic Product (GDP) measures economic growth over a set period, typically quarterly. The most reliable comparisons evaluate GDP against the same quarter from previous years, but temporary disruptions can skew these figures, as seen during the early days of the COVID pandemic in 2020, when growth sharply declined.
Positive GDP results generally favor a country’s currency, reflecting economic expansion, while declines may weaken it. As economies grow, spending typically rises, potentially leading to inflation. Consequently, central banks may raise interest rates to combat inflation, which can also attract global investors.
When GDP rises, spending tends to increase, leading to inflation pressures. As central banks respond by elevating interest rates, this has a negative effect on gold prices, as higher rates increase the opportunity cost of holding cash rather than investing in riskier assets.
