WEEKLY REPORT

Market analysis

Highlights:

• EUR/USD : Falls to 1-month lows
• GBP/USD : Vulnerable to stimulus expectations
• USD/JPY : Yen weakens as investors eye monetary policy divergence
• USD/CAD : Erases gains after strong Canadian data
• Gold : Falls ahead of FOMC meetings
• Crude Oil : Near two-month low on oil glut worries

Gold

Falls ahead of FOMC meetings

Gold prices declined on Friday, ending the week close to a three-week low as renewed expectations for a Federal Reserve rate hike later this year boosted the U.S. dollar and as investors looked to buy into rising equity markets rather than purchasing safe-haven assets. A recent string of better than expected U.S. data reignited speculation that the Federal Reserve will raise interest rates before the end of the year. The flash reading for July's PMI Manufacturing Index surged more than a full point to 52.9, soaring to its highest level in nine months. Gold bounced off three-week lows after the European Central Bank stood pat on Thursday, as Mario Draghi emphasized that policymakers need more time to assess the long-term ramifications of the U.K's decision to leave the European Union before deciding whether to implement further easing measures. The U.S. Department of Labor said the number of individuals filing for initial jobless benefits in the week ending July 16 fell by 1,000 to 253,000 from the previous week’s total of 254,000. Separately, the Federal Reserve Bank of Philadelphia said that its manufacturing index fell to -2.9 this month from June’s reading of 4.7.

In the week ahead, investors will be looking to Wednesday’s highly-anticipated Federal Reserve policy statement for fresh guidance on the pace of interest rate hikes over the next several months. The yellow metal remained supported amid speculation central banks around the world will step up monetary stimulus in the next few months to counteract the negative economic shock from the Brexit vote.