U.S. Economy's Strength Shines Despite Slower Business Activity

A closely-monitored purchasing managers survey found the fact that U.S. business activity slowed to a five-month lowest in July, principally due to a slower growth rate within the service industry. But, the survey did better than other surveys carried out in Europe.

Additionally, the decline in U.S. input prices and slow hiring suggest improvements in the Federal Reserve's efforts to fight the rising cost of living.

Flash U.S. Composite PMI index, created by S&P Global, tracking both services and manufacturing, decreased by 52 points in the month of July, down from June's 53.2. While July was the sixth consecutive month of expansion, services' performance declined. It's worth mentioning that readings over 50 suggest an expansion.

Dollar's Resilience and Economic Divergence

The index of the dollar climbed 0.148 percent to 101.230. The euro dropped 0.35 percent to $1.1084. The sterling was trading at $1.2816 with a drop of 0.30 percent. Investors had been watching the central bank meeting dates this week and anticipating rate hikes for both Europe as well as the United States.

The euro experienced a dip due to PMI figures indicating that the eurozone's business activity slowed greater than expected in July. In the same way, the pound saw a decline when British business data was released, but with a smaller impact.

Bank of Japan's Potential Market Impact

The Japanese yen grew by 0.40 percent against the greenback and settled at 141.23 for a dollar. Investors were watching closely for the Bank of Japan (BOJ) meeting and speculated that this could have been the central banking institution with the highest probability likely to announce a market-moving unexpected event. An eventual change in its yield curve policy was possible.

Upcoming Central Bank Meetings and Rate Hike Expectations

This week was busy for central bank sessions, including the Federal Reserve concluding its meeting on Wednesday. It was followed by the European Central Bank (ECB) the next day, followed by The Bank of Japan on Friday. Market participants had been anticipating rate increases from both the ECB and the Fed by a total of 25. They were focusing on signals these central banks are likely to communicate regarding their September meeting, and the possibility of softer inflation indicators may prompt the Fed to suggest the possibility of a temporary pause.

Cryptocurrency and Bitcoin's Performance

In the cryptocurrency market, the bitcoin price saw the worst drop, a 2.56 percent drop and reached $29,116.02, and Ethereum decreased by 2.51 percent, settling at $1,847.04.

As the market was set to have an active week, traders kept a focus on the central bank's announcements and the earnings of large businesses. Divergence in the economy between the U.S. and its major competitors continued to show the power of the dollar as it has weathered the higher rates with a higher degree of success than its peers.