Ready to kick back and enjoy the weekend? Not so fast!
Before we dive into some well-deserved downtime, let's take a quick tour through the maze of this week's economic news. From the hustle and bustle of the US service sector, the intrigue of Meta stock's performance to the dramatic fall of Gold prices, and finally, the suspense of the EUR/USD's dance near the 1.0900 level.
It's been quite a week in the global financial market!
The US service sector picks up in June as inflation gradually slowing
The US services sector accelerated more than expected in June as new orders increased, while a measure of input prices fell to a three-year low, indicating a potential cooling of inflation, according to the Institute for Supply Management (ISM).
The non-manufacturing PMI rose to 53.9 in June, up from 50.3 in May, with any reading above 50 signaling growth. Despite the economy facing risks due to the Federal Reserve's significant interest rate hikes, key indicators suggest consistent progress.
But the Fed is expected to continue its rate increases in response to a tight labor market and high inflation.
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Meta stocks giant rose more than 2% after the launch of Threads
Shares of Meta Platforms, the parent company of Facebook and Instagram, saw a modest increase of 2% after the successful launch of its Threads application, which amassed over 10 million user sign-ups within a few hours. The stock had reached an 18-month high of $295.29 in anticipation of the launch. Threads, now live in 100 countries and operating without ads, is Meta's answer to Twitter and is seen as the most significant competitor to the Elon Musk-owned social media platform.
For context, Twitter reported 229 million monthly active users in May 2022, before Musk acquired the company.
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Gold heads for fourth weekly loss on calls for more rate hikes
Gold prices are on track for a fourth consecutive weekly decline, driven by expectations for ongoing interest rate hikes from the Federal Reserve following robust US job data and bullish comments from Fed policymakers. Spot Gold was steady at $1,910.20 per ounce but is down 0.5% for the week. The strengthening labor market is prompting investors to anticipate further rate hikes, which raise the opportunity cost of holding non-yielding bullion, such as Gold.
The Federal Reserve Bank of Dallas President, Lorie Logan, supported the case for another rate rise in June, maintaining her perspective that more increases are needed to moderate the still-strong economy.
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EUR/USD: ECB's Lagarde and US NFP key to breaking near 1.0900 stalemate
The EUR/USD bounced back to 1.0900 on Thursday from a three-week low near 1.0830, aided by the release of US economic data and market dynamics during the European session. Despite this recovery, risks remain skewed to the downside due to technical factors, risk aversion, and positive US data. In the Eurozone, retail sales for May remained flat, and Germany reported a 6.4% surge in factory orders, outperforming expectations.
A 25 basis point rate hike is almost fully priced into the European Central Bank's (ECB) July 27 meeting, with a 60% likelihood for a subsequent hike in September.
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This concludes our weekly recap. Have a great weekend and see you next week! 👋
