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Daily Pivots: (S1) 0.8075; (P) 0.8113; (R1) 0.8189; More….

USD/CHF's rally is in progress and intraday bias stays on the upside. Rise from 0.7871 is at least corrective fall from 0.9200. Further rise should be seen to 38.2% retracement of 0.9200 to 0.7871 at 0.8379 next. On the downside, below 0.8037 minor support will turn intraday bias neutral and bring consolidations first.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8475 resistance holds.

Consumer spending and income growth both improved in June. Personal income rose 0.3% month-over-month (m/m), a hair above the market consensus forecast for a gain of 0.2% m/m. Growth in wages and salaries eased to 0.1% m/m from 0.3% previously, but transfer payments rebounded from a weak showing in May.

Consumer spending grew at 0.3% m/m too, in nominal terms. With income and spending growing at a similar pace, the personal savings rate remained unchanged at 4.5%.

On an inflation-adjusted basis, spending rose 0.1% m/m, coming on the heels of a 0.2% drop in the month prior. Goods spending grew at 0.1% m/m, as a continued decline in durable goods (owing in part to a pullback in vehicle sales) was offset by a decent gain in non-durable goods that month. Services grew at a similar clip to goods, expanding at 0.1% for the third month in a row.

Inflationary pressures recorded a small uptick on a month-to-month basis, with core PCE – the Fed's preferred inflation gauge – rising by 0.3% m/m from the 0.2% pace in the two months prior. In annual terms, core PCE inflation held steady at a pace of 2.8%.

Key Implications

Yesterday's GDP report showed an improvement in consumer spending in Q2, but the June data shows that the quarter ended on a soft note. Goods spending managed to hold its own despite a continued decline in durable goods, thanks to the offset provided by a decent gain in non-durables. But, in a sign that that we're in for a slower period, spending in the much larger and generally more stable category – services – continued to grow at a similarly modest pace of 0.1% for the third month in a row.

The Fed's preferred inflation gauge – core PCE – held flat at a slightly higher than expected 2.8% year-on-year in June, while an uptick was visible in the month-over-month and 3-month annualized terms. With inflationary pressures likely to heat-up further in the coming months alongside some easing in the labor market, we anticipate that consumer spending will see some additional easing in the third quarter.

Daily Pivots: (S1) 148.39; (P) 148.96; (R1) 150.12; More...

USD/JPY's rally continues today and remains on track to 100% projection of 139.87 to 148.64 from 142.66 at 151.43, which is close to 151.22 fibonacci level. Decisive break there could prompt upside acceleration to 161.8% projection at 156.84 next. On the downside, below 148.58 minor support will turn intraday bias neutral and bring consolidations first, before staging another rally.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.

Yen's sharp intraday reversal became the central focus in FX markets today, as traders reassessed BoJ’s latest policy guidance and economic projections. While initial positioning leaned toward hawkish interpretations, especially after last week’s US–Japan trade breakthrough, sentiment quickly pivoted as markets leaned into a more dovish read of BoJ’s inflation outlook.

On the one hand, BoJ did indicate confidence that underlying inflation would rise and stabilize around its 2% target within the projection horizon—a signal that supports gradual policy normalization. However, the near-term inflation picture was tempered. The central bank emphasized that the projected jump in core CPI to 2.7% this fiscal year was largely due to food prices, which do not reflect sustained demand-pull inflation. This cautious tone signaled no rush to raise rates again.

The reaction in FX was clear. Traders who had cut Yen shorts ahead of the meeting—in anticipation of a hawkish surprise—quickly reloaded those positions as the perceived risk faded.

Meanwhile, Dollar remains the week's top performer, underpinned by firm core PCE inflation and steady jobless claims data. Despite ongoing political pressure from US President Donald Trump to slash rates, markets continue siding with the Fed’s patient stance. Odds of a September cut have now slipped below 40%.

In broader FX rankings, Loonie and Sterling are second and third strongest this week, while Euro and Swiss Franc lag at the bottom. Aussie remains weak too, while the Yen and Kiwi sit in the mid-pack.

On the trade front, U.S. Treasury Secretary Scott Bessent said negotiations with China in Stockholm have made progress, though “a few technical details” remain. He struck an optimistic tone but admitted that Trump has yet to be briefed on the outcome. Markets are watching closely, with the August 12 truce deadline with China fast approaching.

In Europe, at the time of writing, FTSE is up 0.30%. DAX is down -0.27%. CAC is down -0.45%. UK 10-year yield is down -0.016 at 4.592. Germany 10-year yield is down -0.011 at 2.698. Earlier in Asia, Nikkei rose 1.02%. Hong Kong HSI fell -1.60%. China Shanghai SSE fell -1.18%. Singapore Strait Times fell -1.08%. Japan 10-year JGB yield fell -0.007 to 1.556.

US core PCE holds at 2.8%, income and spending rebound

Fed’s preferred inflation gauge offered little relief in June, with the core PCE index holding at 2.8% yoy, above market expectations of 2.7% yoy. Headline PCE inflation also rose more than expected from 2.4% yoy to 2.6% yoy. Both monthly readings stood at 0.3% mom, reinforcing the message that price pressures are proving sticky and raising questions about the timing of any Fed rate cuts.

On the household front, income and spending showed modest improvement. Personal income climbed 0.3% mom, rebounding from a surprise decline in May. Personal spending rose by the same margin, albeit slightly below the 0.4% mom forecast. The recovery suggests consumers remain active, but the slight miss in spending hints at growing sensitivity to price levels and borrowing costs.

Labor data, however, remained steady: initial jobless claims edged up by 1 to 218k and continuing claims were flat at 1.946 million—consistent with a still-solid employment backdrop.

Altogether, the mixed bag of sticky inflation, resilient income, and cautious consumption leaves the Fed on hold, with markets still uncertain about the case for a September rate cut.

Canada’s economy shrinks again in May, but June rebound eyed

Canada’s GDP contracted by -0.1% mom in May, marking a second consecutive monthly decline and aligning with expectations.

The decline was driven by weakness in goods-producing sectors, particularly a pullback in mining, quarrying, and oil and gas. While manufacturing managed to expand, services output was flat overall. Only 7 out of 20 industries registered growth.

However, there may be some relief on the horizon—Statistics Canada’s advance estimate suggests GDP rose 0.1% in June, with strength in retail and wholesale trade partially countered by a dip in manufacturing.

European data wrap: German CPI and Swiss retail surprise to upside

European data released today pointed to continued labor market resilience and upside surprises on inflation.

Eurozone unemployment rate held steady at 6.2% in June, defying expectations of a slight uptick to 6.3%. Across the broader EU, the jobless rate was unchanged at 5.9%, underscoring continued employment strength despite trade disruptions and slowing manufacturing activity.

In Germany, inflation pressures were firmer than expected. Headline CPI rose 0.3% mom in July, outpacing consensus for a 0.2% rise. Annual inflation held at 2.0% yoy, above the expected 1.8% yoy, suggesting steady underlying pressures even amid weaker growth. Import prices were flat on the month, beating forecasts for a modest decline of -0.2% mom, potentially limiting some disinflation via exchange rate channels.

Separately, Switzerland surprised to the upside with a 3.8% yoy surge in June retail sales, well above the 0.2% yoy consensus. The data offers a counterpoint to concerns about weakening domestic demand in the region and may reinforce the case for a patient SNB as it weighs the need to bring back negative rate.

BoJ holds at 0.50%, lifts 2025 inflation projections sharply on food costs

The BoJ kept its short-term policy rate unchanged at 0.50% as expected, reaffirming its cautious stance in the face of growing external risks. While the central bank reiterated its intention to continue normalizing policy in light of improving economic and price conditions, it also cited heightened uncertainty around global trade and policy developments as justification for a steady hand.

In its latest quarterly outlook, the BoJ sharply raised its inflation forecasts. Core CPI for fiscal 2025 was lifted from 2.2% to 2.7%. Core-core CPI, which excludes both fresh food and energy, jumped from 2.3% to 2.8%. The upward revisions were largely attributed to food price increases, though the BoJ still sees underlying inflation remaining subdued in the first half of the forecast horizon.

For fiscal 2026, core CPI was revised slightly higher from 1.7% to 1.8%, and core-core CPI from 1.8% to 1.9%. Projections for fiscal 2027 remained unchanged at 2.0% for both measures. The Bank noted that inflation will pick up toward levels “generally consistent” with the price stability target in the second half of the projection period.

Growth outlooks were little changed. The fiscal 2025 GDP forecast was lifted modestly to 0.6% from 0.5%, while estimates for fiscal 2026 and 2027 were held at 0.7% and 1.0%, respectively. The Bank continues to expect a slow but steady recovery, supported by resilient domestic demand and improvements in global conditions.

BoJ emphasized that the risk balance for growth remains tilted to the downside for 2025 and 2026, though price risks are now broadly balanced.

Asia data wrap: Japan and Australia outperform but China falters

Asian economies delivered mixed signals as fresh data highlighted strength in Japan and Australia while exposing continued softness in China.

Japan’s industrial production rose 1.7% mom in June, defying forecasts for a -0.7% mom decline. The surge was driven by a 14.8% mom jump in transport equipment excluding autos and strength in electronics, a positive surprise despite ongoing US tariffs. Retail sales also rose 2.0% yoy, slightly beating forecasts of 1.8% yoy.

Australian retail sales posted an impressive 1.2% monthly gain in June, sharply above the 0.4% mom consensus. The ABS attributed the spike to widespread discounting and new product launches.

Meanwhile, China's July PMIs disappointed. The NBS Manufacturing PMI dipped from 49.7 to 49.3, remaining in contraction for the fourth straight month. The export component showed no signs of recovery, marking 15 months of sub-50 readings at 47.1 Non-Manufacturing PMI also weakened from 50.5 to 50.1, its lowest since November.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 148.39; (P) 148.96; (R1) 150.12; More...

USD/JPY's rally continues today and remains on track to 100% projection of 139.87 to 148.64 from 142.66 at 151.43, which is close to 151.22 fibonacci level. Decisive break there could prompt upside acceleration to 161.8% projection at 156.84 next. On the downside, below 148.58 minor support will turn intraday bias neutral and bring consolidations first, before staging another rally.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.

Canada’s GDP contracted by -0.1% mom in May, marking a second consecutive monthly decline and aligning with expectations.

The decline was driven by weakness in goods-producing sectors, particularly a pullback in mining, quarrying, and oil and gas. While manufacturing managed to expand, services output was flat overall. Only 7 out of 20 industries registered growth.

However, there may be some relief on the horizon—Statistics Canada’s advance estimate suggests GDP rose 0.1% in June, with strength in retail and wholesale trade partially countered by a dip in manufacturing.

Full Canada's GDP release here.

Fed’s preferred inflation gauge offered little relief in June, with the core PCE index holding at 2.8% yoy, above market expectations of 2.7% yoy. Headline PCE inflation also rose more than expected from 2.4% yoy to 2.6% yoy. Both monthly readings stood at 0.3% mom, reinforcing the message that price pressures are proving sticky and raising questions about the timing of any Fed rate cuts.

On the household front, income and spending showed modest improvement. Personal income climbed 0.3% mom, rebounding from a surprise decline in May. Personal spending rose by the same margin, albeit slightly below the 0.4% mom forecast. The recovery suggests consumers remain active, but the slight miss in spending hints at growing sensitivity to price levels and borrowing costs.

Labor data, however, remained steady: initial jobless claims edged up by 1 to 218k and continuing claims were flat at 1.946 million—consistent with a still-solid employment backdrop.

Altogether, the mixed bag of sticky inflation, resilient income, and cautious consumption leaves the Fed on hold, with markets still uncertain about the case for a September rate cut.

Full US personal income and outlook release here.

Full US jobless claims release here.

European data released today pointed to continued labor market resilience and upside surprises on inflation.

Eurozone unemployment rate held steady at 6.2% in June, defying expectations of a slight uptick to 6.3%. Across the broader EU, the jobless rate was unchanged at 5.9%, underscoring continued employment strength despite trade disruptions and slowing manufacturing activity.

In Germany, inflation pressures were firmer than expected. Headline CPI rose 0.3% mom in July, outpacing consensus for a 0.2% rise. Annual inflation held at 2.0% yoy, above the expected 1.8% yoy, suggesting steady underlying pressures even amid weaker growth. Import prices were flat on the month, beating forecasts for a modest decline of -0.2% mom, potentially limiting some disinflation via exchange rate channels.

Separately, Switzerland surprised to the upside with a 3.8% yoy surge in June retail sales, well above the 0.2% yoy consensus. The data offers a counterpoint to concerns about weakening domestic demand in the region and may reinforce the case for a patient SNB as it weighs the need to bring back negative rate.

Yen reversed earlier gains in the European session as traders reassessed the Bank of Japan's latest economic projections and policy stance. While BoJ maintained its upbeat tone on inflation eventually aligning with the 2% target, near-term commentary and projections have dampened rate hike expectations.

The central bank sharply upgraded core CPI forecasts for fiscal 2025 to 2.7%, but emphasized that the jump was mainly die to food prices. It sees inflation quickly falling back, with underlying price growth remaining subdued.

Even though core CPI is now expected to hit 1.8% in fiscal 2026 and reach 2.0% in 2027, the market appears to be focusing on BoJ’s cautious tone and lack of urgency to tighten further. The reaction suggests that traders may now be dialing back expectations for any near-term policy action.

Technically, AUD/JPY's bounce solidifies the case that price actions from 97.41 are merely forming a sideway consolidation pattern. Thus, near term bullish outlook is maintained. Firm break of 97.41 will target 61.8% projection of 86.03 to 95.63 from 92.30 at 98.23 next.

Market Overview

The crypto market capitalisation rose 0.5% during the day to $3.90T, following the reversal of the stock markets and Bitcoin at the end of the day on Wednesday, after falling to $3.79T immediately after the Fed’s announcement on the key rate. The influence of macroeconomic factors on cryptocurrencies continues to grow, even in the absence of major industry developments — a trend that can also be seen as part of the market’s maturation.

Bitcoin bulls once again defended the lower boundary of the range, which has been holding for almost three weeks, preventing the price from settling below $116K on Wednesday evening. A powerful buying momentum brought the price back to the $118.6K area. But the market still needs drivers to storm $120K. The US White House report on the development of digital assets did not contain any details that could inspire new buyers, making the crypto market follow the trends of macroeconomics and traditional finance.

News Background

According to Glassnode, for the first time since April 2023, Ethereum has reached 40% open interest in the derivatives market, while Bitcoin’s dominance is showing a decline.

Bernstein believes that large companies are increasingly choosing Ethereum over the first cryptocurrency as an investment vehicle, as ETH offers an income-generating tool such as staking.

The US SEC has begun reviewing an application from BlackRock, the world’s largest investment company, to stake Ethereum held in its ETH ETF.

Asian countries are tightening crypto regulations. The Bank of South Korea (BoK) has created a new division to monitor the crypto market. Indonesia has announced tax increases on cryptocurrency transactions, and Hong Kong has finalised rules for stablecoins.

Algeria has banned all cryptocurrency transactions, including exchange, storage, and mining. Violators of the new rules face fines and imprisonment.

Crypto lender Abra has suddenly suspended withdrawals for international customers. The crypto community fears that the platform may repeat the fate of the bankrupt Celsius and BlockFi.

The GBP/USD pair dropped to 1.3252, its lowest level since 11 May 2025, as a resurgent US dollar and disappointing UK economic data weighed on the pound.

Market sentiment has shifted from concerns about inflation to fears of an economic slowdown, while optimism surrounding new trade agreements has bolstered the dollar.

Although warmer weather boosted food sales, the broader economic outlook remains fragile after worse-than-expected PMI figures. This has reinforced expectations that the Bank of England (BoE) could cut interest rates by 25 basis points as early as August, with another potential reduction before year-end to stimulate growth.

Meanwhile, the dollar gained strength following the announcement of a US-EU trade deal, which imposes 15% tariffs on most European exports, including cars. The agreement has averted a further escalation in trade tensions, providing additional support for the greenback.

However, not all European leaders view the deal as favourable. Many argue that the terms disproportionately disadvantage the EU. While the UK maintains its separate agreements, the broader economic ripple effects are still being felt, given the interconnected nature of global markets.

Technical Analysis: GBP/USD

H4 Chart:

On the 4-hour chart, GBP/USD continues its downward trajectory towards 1.3152, with a consolidation range currently forming around 1.3268. A downside breakout from this range could see the pair extend losses towards 1.3152, followed by a potential corrective rebound to 1.3370. This scenario is supported by the MACD indicator, where the signal line remains below zero and points sharply downward.

H1 Chart:

On the hourly chart, the pair declined to 1.3225 before correcting to 1.3270. Further downside movement towards 1.3152 is anticipated today, with the Stochastic oscillator confirming this outlook: its signal line has crossed below 80 and is trending downward towards 20.

Conclusion

The pound remains under pressure amid a stronger dollar and a lacklustre UK economic performance. With rate cut expectations mounting and global trade dynamics shifting, further volatility in GBP/USD is likely. Traders will be watching key technical levels for confirmation of the next directional move.