The USD powered higher after the Fed held rates steady but delivered a hawkish message, with Powell stressing the need to stay vigilant on inflation despite softer growth signals. Q2 GDP surprised to the upside at 3%, while ADP jobs data reinforced a resilient labour market. Treasury yields pushed higher dragging EUR and GBP lower, with both unable to mount any kind of bounce as the market leaned into renewed USD strength. Risk sentiment turned cautious, with equities slipping and flows rotating into the dollar as the safe-haven of choice.
*Daily move - against G10 rates at 7:00 am, 31.07.25
** Indicative rates - interbank rates at 7:00 am, 31.07.25
USD bias remains firmly bullish ahead of jobless claims and core PCE numbers today. Soft numbers may spark a USD pullback. However, losses may be minimal, especially ahead of nonfarm payrolls tomorrow. Furthermore, continued strong numbers stateside will likely lead to further USD gains.
German CPI numbers are also on the agenda today ahead of tomorrow's EU CPI numbers as well. French CPI held at 1% in July, but had little impact.
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