Markets mixed, gold shines after upbeat data, ahead of Powell’s second testimony

Markets have been cooling after a dovish message from Fed Chair Powell boosted stocks and weighed on the dollar. Investors are digesting upbeat data from China and the UK and eyeing US jobless claims and other figures. Cryptocurrencies are edging down again while gold is shining.

No imminent tapering: Jerome Powell, Chair of the Federal Reserve, said that “substantial further progress” in the economy is still “a ways off,” pushing back against the need to taper down bond buys. Powell also stressed that higher inflation – as reflected in surprisingly strong consumer and producer prices – is related to the reopening, thus transitory. Markets advanced on Wednesday and the dollar lost ground.

US bond yields have dropped in response to Powell’s dovish message. The main beneficiary has been gold, which has topped $1,830, the highest in nearly a month.

The Fed Chair appears before another committee on Thursday and could shed more light on economic developments and on policy. He will have the chance to react to weekly jobless claims, which are set to decline from last week’s 373,000. The Philly Fed Manufacturing Index and the Empire State one are also of interest.

China, the world’s second-largest economy, reported an annualized growth rate of 7.9% in the second quarter, marginally below expectations. On the other hand, industrial output and retail sales both beat estimates in June, an encouraging sign for the global economy.

GBP/USD is trading around 1.3850, benefiting from mostly upbeat UK labor statistics. Jobless claims tumbled by 114,700 in June, much better than expected and wages jumped 7.3% YoY in May, adding to concerns about growing inflation expectations. Consumer prices rose 2.5% last month. Only the Unemployment Rate disappointed by rising to 4.8%.

Bank of England Governor Andrew Bailey said he will not be rushed to raising rates. His colleague Michael Saunders speaks later. Daily covid cases have topped the 42,000 mark in Wednesday’s report, adding to reopening concerns.

EUR/USD is hovering around 1.1850 amid the old continent’s own increase in coronavirus cases related to the Delta variant.

AUD/USD is hovering under 0.75, unable to take advantage of excellent Australian employment figures. The land down under gained 29,100 jobs and the jobless rate fell to 4.9%.

USD/CAD is trading above 1.25 after the Bank of Canada announced it would reduce weekly bond buys by C$1 billion, as expected, but downgraded its forecasts for this year. The loonie is also pressured by the slide in oil prices. WTI Crude is trading around $72.

Cryptocurrencies have been extending their gradual decline, with Bitcoin nearing $32,000 and Ethereum changing hands at around $1,950.

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