The ISM Manufacturing Prices Paid index in the United States was reported at 64.8 for July, falling short of the expected 70. The data shows a change in manufacturing prices, reflecting factors influencing pricing dynamics in the industry.
In the currency markets, EUR/USD has surged above 1.1550 due to weaker US employment and manufacturing data. Meanwhile, GBP/USD recovers, trading above 1.3250, assisted by the same economic reports, which suggested dollar weakness.
Gold Reaches New Highs
Gold reached a weekly high of around $3,350, benefitting from falling US Treasury bond yields. The metal’s price movement correlates with changing market expectations about the Federal Reserve’s future rate decisions, driven by disappointing job figures.
In the cryptocurrency domain, Bitcoin and other coins face challenges after a strong July. Bitcoin fell below $115,000 as traders eyed support levels amid increased market liquidations and price fluctuations.
Given the recent signs of a cooling US economy, we believe the path of least resistance for many assets has now changed. The ISM data, showing a drop in prices paid by manufacturers to 64.8, along with weaker employment figures, suggests the Federal Reserve’s recent rate hikes are taking hold. This means we should prepare for a period of sustained US dollar weakness.
For currency markets, we see further upside in EUR/USD and GBP/USD. Traders should consider buying call options on the Euro to target a move toward 1.1700 in the coming weeks. Looking back, the dollar’s sharp decline in late 2023 provides a clear historical parallel for how quickly sentiment can turn once the market believes the Fed is done hiking.
Bullish Outlook For Gold
The environment is now extremely bullish for gold, which has responded by breaking key resistance to reach $3,350. The decline in Treasury yields is the primary driver, and we see this trend continuing. We should be looking to add to long gold futures positions, as markets are now pricing in a significant chance of a rate cut before the end of 2025.
In contrast, the cryptocurrency market requires a more defensive strategy for now. Bitcoin’s failure to hold $115,000 signals significant profit-taking after the July rally, which was largely driven by speculation around new institutional products. The high volume of liquidations, exceeding $400 million in just 48 hours, suggests we should wait for a clear support base to form before initiating new long trades.
