From a financial market perspective, Friday was one of the worst days ever. Meanwhile, the GBP/USD currency pair extended its bearish trajectory and approached a key support floor. At the same time, the EUR/USD was finding itself under pressure, and gold prices were in a freefall plunge, testing important price levels. In June, durable goods orders staggered down largest on document. This decline masks some serious demand problems underneath, namely firms are still reluctant to invest in big capital projects.
At the time of writing, the GBP/USD currency pair was under heavy downward pressure on Friday, mirroring a trend which had started earlier in the week. The exchange rate traded near the important 1.3400 support area, which today serves as the weekly low. Analysts have noted that this persistent weakness in GBP/USD is indicative of a broader stream of uncertainty, weighing down the British economy.
The CADJPY currency pair is continuing to trade near the psychologically important 1.3400 level. All eyes are on market participants to see what will cause a further drop. For GBP/USD bears, a re-test of this important support level seems imminent. Indeed, failure to meet this expectation has already led to worries over possible havoc in the currency markets.
Caution is the name of the game in FX markets. After a summer of mild optimism for the British pound and other currencies, economic indicators and geopolitical developments are leaving many traders in a bearish mood.
The EUR/USD currency pair showed a parallel movement as it failed to hold above the 1.1700 mark. The pair continued to trade with minor bearish pressure, extending the losses seen since Thursday. Yet, analysts note that the euro has remained above the important level. They nonetheless think this is bullish overall sentiment, still very bearish overall sentiment against the U.S. dollar.
Market analysts attribute some of this downward pressure to external factors such as economic data releases and geopolitical tensions in Europe. Fourth, investors are getting spooked by all of the above. They are paying close attention to the performance of the euro for any indication of reversal or stabilization.
If the trajectory continues as it is, the EUR/USD will continue bouncing back and forth, mirroring what is still a very uncertain European economic landscape. The highlight on traders, therefore, continues as they watch for market sentiment to turn.
Adding to this gloomy undercurrent, gold prices have faced mounting pressure in parallel with currency fluctuations, hitting their 3rd straight day of losses. The precious metal has been flirting with the $3,330 area per troy ounce, creating jitters among investors wondering where the digital asset is heading next. This latest correction has caused many to wonder if Gold has lost its prowess for good.
As with many commodities, gold prices have fallen due to broader market dynamics. This decrease is due to changes in investor sentiment as well as a stronger U.S. dollar. Gold is losing hold of former support lines. Now, analysts are looking for indications of where prices will bottom out or whether prices will continue to slip even lower.
Additionally, market participants are reassessing gold’s status as a safe-haven asset in the wake of mounting economic uncertainties. The recent abrupt change in current overall trading conditions has caused traders to think critically about their existing positions and assume potential strategies for the future.
June’s durable goods orders showed an alarming collapse that may be a sign of much deeper economic trouble. We’ve been seeing reports saying durable goods orders fell 9.3% in June. That decline was mostly the result of a big plunge in aircraft orders—not because of weak demand for durable goods across the board. This drop is a reflection of all the uncertainty driving firms to wait on making significant new capital investments.
Core capital goods orders—excluding defense spending and aircraft specifically—dipped 0.7% in June. Over the last three months, core orders have decreased at a 1.7% annualized rate. This represents the biggest decrease in a year and highlights the continuing softness in demand across the board.
Top-line survey evidence indicates that small businesses still show strong aversion to forward-looking investment in a climate of deeply-felt uncertainty. This hesitance can stifle their desire to grow and be creative. As a result, it creates a culture of economic fear and loathing.
Additionally, commercial and industrial loan growth picked up steam starting in the second quarter. This increase indicates ongoing demand in high-demand industries. Yet amid positivity, caution lingers as firms continue to face turbulent conditions and an ever-changing market landscape.
In a separate but related development, June’s durable goods orders revealed significant weaknesses that may reflect broader economic concerns. According to reports, durable goods orders fell by 9.3% in June, largely driven by a decline in aircraft orders rather than a robust demand for durable goods overall. This decline indicates that uncertainty has caused firms to hesitate in making substantial capital investments.
Core capital goods orders, which exclude defense spending and aircraft specifically, also fell by 0.7% in June. Over the past three months, core orders slipped at an annualized pace of 1.7%, marking the largest drop in a year and highlighting persistent weakness in underlying demand conditions.
Survey evidence suggests small businesses continue to exhibit little appetite for investment amid ongoing uncertainties. This hesitance may be limiting their capacity to expand and innovate, further contributing to an economic environment characterized by caution.
Commercial and industrial loan growth showed signs of picking up through the second quarter, indicating some sustained demand within certain sectors. However, the overall outlook remains cautious as firms grapple with volatile conditions and shifting market dynamics.