The lack of major data has kept traders focused on overall risk sentiment and positions ahead of this week’s expected data releases.
Commodities such as gold and oil continued to decline, while the US dollar gained against most of its peers.
Find out what headlines are making waves among major assets!
Headlines:
- Inflation in Australia It fell to multi-month lows but remained elevated in July.
- Quarterly construction work in Australia Q2 2024: 0.1% (0.8% expected, -2.0% prior)
- Bank of Japan Deputy Governor Ryozo Himeno He indicated he was prepared to raise interest rates further but hinted that it might not be imminent.
- Swiss Bank UBS Economic Forecast It fell from 9.4 to -3.4 in August; analysts see a 68% chance of the SNB cutting rates by September.
- Environmental Impact Assessment: US crude oil inventories U.S. crude oil inventories fell by about 0.8 million barrels in the week ending August 23, less than the expected decline of about 3 million barrels.
- Bitcoin fails to hold above $60K
- ANZ: New Zealand Business Confidence Inflation rose from 27.1 to 50.6 in August, its highest level in a decade, even before the Reserve Bank of New Zealand cut interest rates.
Price movement in the broad market:
Dollar Index, Gold, S&P 500, Oil, 10-Year US Treasury Yield, Bitcoin Chart by TradingView
As in previous days, the absence of market-moving news kept most major assets stuck in their ranges early Wednesday, with the exception of crude oil and gold. Oil extended its decline from the previous U.S. session, while spot gold reversed after testing weekly highs near $2,525.
As the European session began, selling pressures on commodities increased. This could be due to a slight recovery in the US dollar ahead of key data releases or profit-taking at the end of the month. Improved risk sentiment also played a role, with easing tensions in the Middle East and concerns over Libyan oil exports weighing on WTI.
The cautious tone extended to U.S. stock indexes, which fell ahead of Nvidia’s earnings report and key economic data. The S&P 500, Nasdaq and Dow Jones all ended the day lower, while 10-year Treasury yields, bitcoin, spot gold and oil prices remained rangebound as the session ended.
Forex Market Behavior: US Dollar vs Major Currencies:
US Dollar Overlay Against Major Currencies Chart by TradingView
Dollar traders started the day strong, pushing the US dollar higher after Tuesday’s bearish trend. The Australian dollar made some gains, thanks to a slower but still higher monthly inflation rate in Australia in July (hey, it rhymes!).
Bank of Japan Deputy Governor Himeno stoked demand for the yen and dollar in late Asian trade by reiterating the central bank’s readiness to raise interest rates further if growth and inflation are in line with its expectations. The dollar fell and the yen rose on the news, but the moves were partly reversed in early European trade.
In the US, the lack of data has left the dollar vulnerable to month-end flows and positions ahead of Nvidia’s after-market earnings and upcoming US data. The US dollar fell in early US trading and ended the day below its intraday highs.
Potential catalysts coming up on the economic calendar:
- Japan Consumer Confidence at 5:00 AM GMT
- Germany’s preliminary CPI to be released in European session
- Spanish CPI at 7:00 am GMT
- Canada Current Account Balance at 12:30 PM GMT
- US Preliminary GDP at 12:30 PM GMT
- US Initial Jobless Claims at 12:30 PM GMT
- US Goods Trade Balance at 12:30 PM GMT
- US Pending Home Sales at 2:00 PM GMT
- Swiss National Bank President Jordan to speak at 4:00 PM GMT
- FOMC Member Raphael Boucek to Speak at 7:30 PM GMT
- New Zealand Building Permits 10:45pm GMT
- Tokyo Core CPI at 11:30 PM GMT
- Japan Unemployment Rate at 11:30 PM GMT
- Japan Initial Industrial Production and Retail Sales at 11:50 PM GMT
- Australian Retail Sales at 1:30am GMT (August 30)
The euro is expected to see increased volatility during the European session as Germany and Spain publish inflation reports.
In the US, traders will have another chance to weigh in on the outlook for the US economy during today’s parade of lower-level data releases.
Stay tuned for headlines and market themes that could impact overall demand for the US dollar and risk sentiment in the markets!