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EUR/USD edges lower, but ends July with gains

Tuesday, August 01, 2023

Today’s headlines

What’s happening: The EUR/USD forex pair moved lower on Monday, following the release of some major economic reports.

What happened: The Eurozone releases positive data, both for economic growth and inflation rate, on Monday.

The euro exited July with gains versus the greenback, despite settling lower on the last trading session of the month.

Why it matters: Eurozone’s consumer prices increased 5.3% in July, decelerating from the 5.5% recorded in June, and extending the slowdown in inflation rates. Excluding energy and unprocessed food, Eurozone’s consumer prices rose 6.6%, down from the 6.8% figure reported in the previous month.

Another major data release on Monday showed Eurozone’s economy returning to growth in the second quarter. The growth was reported, despite the bloc’s biggest economy, Germany, showing no growth and Italy recording a contraction.

Eurozone’s gross domestic product grew by 0.3% in the second quarter, higher than market estimates of 0.2%. GDP growth stood at 0.6% year-over-year, also topping market expectations of 0.5%.

The economies of France and Spain expanded in the quarter, driven by strength in exports and tourism.

Prospects of the European Central Bank, which increased interest rates by 25 bps in July, halting hikes due to the easing in inflationary pressures and economic growth concerns kept the euro in check on Monday.

Strength in the US dollar also exerted pressure on the EUR/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, added around 0.3% to reach 101.86 on Monday.

The euro, which rose in early trading on Monday, reversed on the release of economic reports from the Eurozone. The EUR/USD pair slipped around 0.1% to 1.0999. However, the forex pair ended July with gains of around 1%.

What to watch: Traders await economic reports on manufacturing PMI and unemployment rate from the Eurozone today. The HCOB Eurozone manufacturing PMI is expected to decline to 42.7 in July, from 43.4 in the prior month. The seasonally-adjusted unemployment rate, which held at a record low of 6.5% in May, is expected to improve to 6.6% in June.

The markets today

Shares of Western Digital will be in focus today following the release of its fourth-quarter results

Context: Western Digital Corporation’s shares fell in after-hours trading on Monday, despite the company reporting better-than-expected quarterly results.

Details: Although Western Digital posted a narrower-than-expected loss for the quarter ended June 30, the memory chipmaker issued a weak forecast for the current quarter citing weak demand, mostly for its cloud business.

The company reported a quarterly loss of $1.98 per share, better than market expectations of a loss of $2 per share. Revenues declined 41% year-over-year to $2.67 billion, but topped the consensus estimates of $2.52 billion.

Western Digital’s cloud revenues declined 53% year-over-year to $994 million in the quarter, while client revenues fell 37%.

Management guided to an adjusted loss of $2.10-$1.80 per share for its fiscal first quarter, versus market expectations of a loss of $1.40 per share. They projected revenues between $2.55 billion and $2.75 billion, compared to estimates of $2.75 billion.

Western Digital’s major rival, Seagate Technology, had also issued a weak revenue outlook for its first quarter last week.

Western Digital’s shares fell 1.6% to $41.87 following the release of quarterly earnings. The company’s stock has added 12% over the past month.

What are expectations: Investors will watch Western Digital’s cloud business, with weak demand impacting the company’s overall results.

Other Markets: US trading closed higher on Monday, with the Dow Jones, S&P 500 and Nasdaq 100 up by 0.28%, 0.15% and 0.04%, respectively.

The news shaping the markets

Reports of Russian missiles hitting an apartment complex and a university building in the central Ukrainian city of Kryvyi Rih sent the safe-haven US dollar index higher this morning.


China’s Caixin general manufacturing PMI declined to 49.2 in July, from 50.5 in the previous month. The figure also missed market expectations of 50.3 and exerted pressure on the CNY/USD forex pair.


Australia’s value of new home loans unexpectedly declined 2.8% to A$15.91 billion in June, missing estimates of a 1.65% increase, which sent the AUD/USD pair lower in forex trading this morning.


Japan’s au Jibun Bank manufacturing PMI was revised higher to 49.6 in July, versus a flash reading of 49.4. However, the figure still being lower than June’s 49.8 exerted pressure on the JPY/USD forex pair.


South Korea’s S&P Global manufacturing PMI increased to 49.4 in July, from 47.8 a month ago. The latest reading signalled the 13th consecutive month of contraction in the country’s manufacturing sector and sent the KRW/USD pair lower in forex trading this morning.

What else to watch today

Russia’s manufacturing PMI, UK’s Nationwide housing prices and manufacturing PMI, Australia’s commodity prices, Turkey’s manufacturing PMI, Spain’s manufacturing PMI and sales of new cars, Italy’s manufacturing PMI, new passenger car registrations and jobless rate, France’s manufacturing PMI, Germany’s manufacturing PMI, number of unemployed people, unemployment change and unemployment rate, South Africa’s manufacturing PMI and total vehicle sales, Mexico’s foreign exchange reserves, manufacturing PMI and business confidence indicator, Brazil’s industrial production, balance of trade and manufacturing PMI, US Redbook index, S&P Global manufacturing PMI, number of job vacancies, construction spending, Dallas Fed services index, ISM manufacturing PMI, Logistics Manager’s index and API crude oil stock change, as well as Canada’s manufacturing PMI.


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