The Federal Reserve remains firmly committed to bringing inflation down to its 2% target, according to remarks from Fed Governor Christopher Waller on Wednesday. He noted that recent declines in inflation expectations have helped to mitigate inflation risks in the United States. Waller also emphasized the central bank's independence in monetary policy decisions, stating it would not be swayed by political considerations. Following his comments at the European Central Bank's forum in Sintra, Portugal, US stock indices pared their losses, with the Dow Jones turning positive and the S&P 500 closing only slightly lower.
Separately, data from ADP Research showed private sector employment increased by 98,000 jobs in June. This figure was below May's revised increase of 122,000 and also fell short of market expectations for a gain of 118,000, marking the slowest pace of growth since March. The ADP report indicated uneven job growth across sectors, with financial activities and information among the fastest-growing industries. In contrast, hiring in the leisure and hospitality sector remained weak for the sixth consecutive month. ADP's chief economist noted that the pace of hiring reflects conditions on both the supply and demand sides of the labor market.
The economic calendar for today features several key releases, including the Eurozone's unemployment rate for May, US non-farm payrolls data for June, weekly US initial jobless claims, and US factory orders for May.
Gold / US Dollar
Gold prices moved higher in a choppy session yesterday, closing with modest gains. The spot price is currently trading near $1,907.50. The advance was supported by a combination of short-covering and a slight pullback in demand for the US dollar as a safe haven, partly due to reported progress in US-Iran negotiations. Additionally, weaker-than-expected US economic data provided some lift for the precious metal. However, the potential for further interest rate hikes from the Federal Reserve capped the metal's upside. Resistance is now seen around the $1,915 level, with support near $1,900.
US Dollar / Japanese Yen
The USD/JPY pair traded in a narrow range yesterday, ending the session marginally lower near 161.30. Profit-taking activity and the softer US economic data exerted downward pressure. Concerns about potential renewed intervention by Japanese authorities to support the yen also weighed on the pair. These downside factors were partially offset by a tempered outlook for Bank of Japan rate hikes and persistent expectations for Federal Reserve tightening, which limited the pair's decline. Immediate resistance is seen around 162.00, while support lies near 160.50.
US Dollar / Canadian Dollar
The USD/CAD pair edged higher during yesterday's session, closing with slight gains near the 1.3710 level. The primary driver was broad strength in the US dollar, bolstered by market expectations for further Federal Reserve rate increases. A further supportive factor was a decline in crude oil prices, linked to easing geopolitical tensions in the Middle East, which pressured the commodity-linked Canadian dollar. Gains were tempered, however, by the release of disappointing US economic indicators. The pair now faces resistance near 1.3800, with support located around 1.3650.
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