Spreadex Market Update
Dollar Gains Traction in Low-Volume Trading
Amidst low trading volumes, the US dollar managed to crawl higher, gaining 0.52% and putting pressure on its currency counterparts.
Key Factors for Today
- Despite low trading volumes, the US dollar has advanced, posing challenges for currency pairs.
- The US July PCE Deflator met expectations at 0.2%, but concerns arise as Personal Spending figures exceeded estimates.
- Inflation in the Eurozone exceeded expectations, pushing the euro weaker against the dollar.
- The Bank of Japan expresses optimism about the economy, leading to a lower USD/JPY exchange rate.
- China's manufacturing PMI shows expansion, potentially influencing gold prices.
- Russia confirms "further action" with OPEC+ to be announced next week, impacting WTI prices.
Market Movers
- The dollar rose to 103.64 with potential resistance at 103.92.
- Euro dropped 0.74% against the dollar to $1.0843.
- The pair moved 0.48% lower, with support at 144.83 and potential resistance at 145.87.
- Increased confidence in China may weigh on gold prices, potentially dropping towards $1930 an ounce.
- WTI saw solid gains of 2.40%, reaching $83.50 a barrel.
Economic Calendar
- GB Housing Prices
- EA HCOB Manufacturing
- IT GDP Growth
- GB S&P Global/CIPS Manufacturing PMI
- CA GDP Growth
- Non-Farm Payrolls
- Average Hourly Earnings
- CA S&P Global Manufacturing PMI
- ISM Manufacturing PMI
The Big News
Mixed Signals from US Economic Data Drive Dollar Gains
The US July PCE Deflator came in as expected at 0.2%, aligning with the narrative that the Federal Reserve might delay further interest rate hikes. However, the Personal Spending figures for July exceeded estimates, raising eyebrows at the Fed. The US dollar index rose to 103.64, with potential resistance seen at 103.92.
Euro Stumbles as Eurozone Inflation Heats Up
The Eurozone witnessed hotter-than-expected inflation, with prices growing at an annual pace of 5.3%, surpassing the forecasted 5.0%. Despite core inflation meeting expectations at 5.3%, the minutes from the last ECB meeting indicated concerns over the near-term economic outlook. This led to a 0.74% drop in the euro against the dollar.
BOJ's Optimism Drives Down USD/JPY Exchange Rate
Meanwhile, the Bank of Japan (BOJ) expressed optimism about the economy, with BOJ official Toyoaki Nakamura hinting at flexibility in Yield Curve Control (YCC). This news led to a 0.48% decrease in the USD/JPY exchange rate.
Caixin PMI Surprises, China's Forex Policy Shifts Impact Gold Prices
In China, the Caixin Manufacturing PMI surprised on the upside, reaching 51.0 compared to the expected 49.3, marking a return to expansion. However, concerns about insufficient internal demand and overseas demand dragging performance lingered. The People's Bank of China (PBOC) announced a reduction in the Forex Reserve Requirement Ratio (RRR) to 4.0% from 6.0%, effective September 15th. This move increased confidence in China but weighed on gold prices.
WTI Soars as Russia Signals Agreement with OPEC+
Russian Deputy Prime Minister Alexander Novak confirmed that Russia had reached an agreement with OPEC+ on "further action," to be announced next week. This development pushed WTI prices up by 2.40%, reaching $83.50 a barrel.
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