|Day's Range||94.205 - 94.231|
|52 Week Range||94.205 - 98.665|
The U.S. Dollar finished lower against a basket of major currencies last week after an easing of tensions over the trade dispute between the United States and China encouraged investors to lift dollar hedges. The Reserve Bank of Australia (RBA) warned on risks to its outlook from U.S.-China trade tensions and weak wages, while reaffirming its next interest rate move would likely be a hike. The New Zealand Dollar was boosted after data showed its economy grew at a faster pace than expected in the second quarter. The Bank of Japan (BOJ) reiterated last Wednesday that it would keep interest rates extremely low “for an extended period,” holding to forward guidance it first introduced in July.
On September 26, the Fed is widely expected to raise the federal funds rate by a quarter-point. This will push the funds target to 2 percent to 2.25 percent, where it last was more than 10 years ago. It was a light day on Friday as far as U.S. economic data was concerned. Flash Manufacturing PMI came in better-than-expected. Flash Services PMI was below the forecast. The flash reading of IHS Markit’s U.S. Composite PMI Output Index for September was 53.4, down from 54.7 last month and the lowest it has been in 17 months.
Inflation numbers out of Japan this morning were a reminder of how far off the BoJ is from making a move, focus shifting to the EU and the Oval Office.
Impressive 2nd GDP numbers drive the Kiwi, with Brexit and retail sales numbers putting the Pound in the spotlight.
It’s been a bullish start to the day, in spite of rising trade war tension, the Aussie Dollar leading the way, focus now shifting to UK inflation.
Another set of tariffs on China supporting the U.S Dollar early on, with the RBA meeting minutes failing to give the Aussie Dollar a boost.
JPMorgan Chase & Co, one of the most well-known U.S. global banking institutions, predicts another financial crisis relatively soon – in fact, two years from now. According to their strategists, investors and other market participants should get ready to see another financial downturn in 2020.
Economic data could take a back seat through the day, the markets more eager to see whether there is a green light for U.S – China trade talks.
The U.S. Dollar was able to recover some of those earlier losses on Friday after the U.S. Commerce Department said domestic retail sales rose 0.1 percent in August, the smallest gain in six months, but July figures were revised higher, supporting the view of solid consumer spending in the third quarter. The Dollar/Yen posted a strong gain last week. Strong demand for higher risk assets and rising U.S. Treasury yields drove the demand for the dollar. The Australian Dollar rose last week after the government reported the Australian economy added 44,000 jobs in August in seasonally adjusted terms, well above forecasts of an 18,000 gain.
In China, Fixed Asset Investment came in at 5.3%, slightly below the 5.5% forecast. Industrial Production rose 6.1%, slightly above the 6.0% estimate. Retail Sales came in 9.0% higher, versus an 8.8% forecast. The Unemployment Rate dipped from 5.1% to 5.0%.
Economic data out of China was better than expected this morning, supporting improved risk appetite, with focus to shift to U.S retail sales and the USD.
U.S. Treasury yields fell on Thursday after the release of the CPI report. The news won’t take the September rate hike off the table, but when combined with yesterday’s weaker-than-expected producer inflation, it could slow down the pace of future rate hikes.
Australia’s employment rose a strong 44.0K in August, more than reversing the modest 4.3K drop in July. U.S. producer prices unexpectedly fell in August with the weakness led by declines in the prices of food and a range of trade services. U.S. crude oil production fell by 100,000 bpd, to 10.9 million bpd, as the industry faces pipeline capacity constraints. According to the Federal Reserve’s latest Beige Book released late Wednesday, three of the Fed’s 12 districts – St. Louis, Philadelphia and Kansas City – reported weaker growth in August. Fed Governor Lael Brainard said in a speech on Wednesday that the Federal Reserve likely will continue gradual interest rate increases but will accelerate the pace if signs that financial imbalances continue to build.
Three main factors lift-up developing countries’ share markets. Global stocks rise on hopes of new trade talks. Investors await the ECB and BoE decisions.
Monetary policy to drive the EUR and the GBP this afternoon, with inflation figures to hit the USD, while Brexit, NAFTA and Trump will also be a factor.
The Labor Department reported on Wednesday is producer price index (PPI) for final demand edged lower by 0.1 percent last month after being unchanged in July. The drop in the PPI was the first since February 2017. Economists were looking for an increase of 0.2 percent in August. Crude oil prices rallied to their highest levels of this year after a drop in U.S. crude oil inventories and the prospect of the loss of Iranian supply triggered a strong upward price spike.
Asian equities are on the slide again, with economic data providing little support, as the markets continue to fret over rising trade tensions.
Stocks are being pressured overnight on the back of the news that China will be making a request to the World Trade Organization (WTO) to impose sanctions on the U.S. The two-year yield hit 2.744 percent for the first time since July 2008. The U.S. Dollar plunged on Tuesday against the Canadian Dollar after Canada signaled it was ready to make a concession to the United States to resolve their talks over reworking NAFTA. The Australian Dollar, a proxy for global growth due to the nation’s significant trade exposure to China, is trading near a 2 ½-year low early Wednesday.
A mixed start to the day on the data front, leaves the markets to look ahead to employment numbers out of the UK, the Pound find strong Brexit support.
With trade data out of China adding to already existing trade tensions, focus shifts to the Pound, with heavy set of stats and Brexit chatter in focus.
Investors are stashing US dollars rather than gold under the mattress these days as the greenback is the new safe haven of choice for those seeking refuge in turbulent times. They are flocking to the US currency en masse every time geopolitical and trade tensions push them to make a defensive move while bullion lags behind. But this is bad news for emerging markets and here is why….
Strong domestic economic data helped underpin the dollar last week. Key reports included the ISM Manufacturing PMI, ISM Non-Manufacturing PMI, and Non-Farm Payrolls. Treasury yields jumped after the numbers were released and stocks were mixed on expectations the data justified more rate hikes from the Federal Reserve. Worries about escalating trade disputes continued to weigh on emerging markets including China, driving investors into the safety of the U.S. Dollar.
Overall, the data strongly suggests the Fed is likely to raise rates in December and perhaps as many as four times in 2019. However, these hikes are not yet a done deal based on the performance in the financial futures markets. The fresh data does, however, help push the Fed in the direction of raising rates.
Unless defying short-term symmetrical triangle, presently occupying the region between $1206 and the $1191, Gold isn’t likely to register much moves. However, expected strength of the US Dollar is indicating brighter chances for the yellow metal’s decline than the otherwise. In that case, break of $1191 highlights the importance of $1182.50-$1181.50 horizontal-region, which if not respected can further drag the quote to $1173 and the $1160. ...