Spreadex Market Update
Global Shifts and Key Data Awaited
Markets displayed mixed sentiments as European indices advanced on banking recovery, while US equities faced a decline amid contemplation of Chinese deflation and the impending US CPI release. Amidst these dynamics, gold witnessed a third consecutive session of decline due to a strengthening dollar.
Key Factors for Today
- Risk Appetite Subdued in Anticipation of Crucial Data
- Gold's Retreat Attributed to Chinese Deflation Concerns
- Japanese PPI Falls Short of Projections; USD/JPY Sees Uptrend
- US Crude Stocks Surge, WTI Reaches New Highs
- Australian Inflation Expectations Dip, AUD Responds to Banking Sector
- European Gas Prices Soar, Reaching Heights of March
Market Movers
- European indices show gains amid banking sector rebound, while US equities decline on Chinese deflation concerns ahead of US CPI release.
- Gold experiences third consecutive session of decline due to dollar's ascent.
- Chinese deflation triggers global repercussions, pushing gold down with a 3-day losing streak to $1915/oz.
- US President Joe Biden enforces investment restrictions on Chinese majority foreign-owned groups, focusing on tech sectors.
- Japanese PPI disappoints, but USD/JPY maintains 3-day ascent despite inflationary pressure relief.
Economic Calendar
- US Inflation Rate
- Initial Jobless Claims
- Fed Harker Speech
- Fed Bostic Speech
- NZ Business PMI
- OPEC Monthly Report
The Big News
Gold's Decline Amid Global Repercussions: China's Deflationary Impact and Biden's Executive Order
Gold experienced a notable descent as it recorded a three-day losing streak, reaching a value of $1915/oz. This retreat was underpinned by China's deflationary context, triggering a global repercussion and driving the dollar's upward trajectory. The precious metal's value now hovers below $1925/oz, raising concerns over the $1900 handle.
Japanese PPI Data: A Nuanced Picture Amid Yen's Response and USD/JPY Ascendance
Japanese PPI data revealed a nuanced picture, with July's monthly growth rate settling at 0.1%, falling short of the 0.3% projection. Despite this, the annual rate surpassed expectations at 3.6%, outperforming the 3.5% forecast. Although the growth rate marked its slowest since March 2021, it managed to alleviate concerns regarding inflationary pressures, consequently impacting the yen's strength. The USD/JPY pair exhibited a three-day streak, with prices ascending above ¥144.00.
US Crude Stocks Rise Against All Odds: Market Shock Absorbed, OPEC+ Dynamics Discussed
US crude stocks confirmed growth, surpassing forecasts by reporting a 5.9 million barrel increase compared to an expected 1.5 million barrel rise. Conversely, gasoline inventories defied expectations with a surprising 2.7 million barrel drawdown, as opposed to the projected 0.5 million barrels. Despite these supply-side developments, the anticipation of heightened demand mitigated potential market shocks, culminating in the highest crude prices since November 2022.
Australia's Inflation Expectations Dip, AUD Reacts to Banking Sector Shifts
Australia encountered lower inflation expectations, with the August survey indicating a decline from 5.2% to 4.9%, marking the lowest point since April. Interestingly, the Australian dollar's response was more pronounced in reaction to a pullback in Aussie shares, primarily driven by the performance of bank stocks. Consequently, the AUD dropped by 0.25% to $0.6527. The AUD/USD pair maintained a confined trading range, bound by $0.6496 and $0.6576, poised for potential breakout scenarios.
Surging European Gas Prices: Strike in Australia Catalyses EU Gas Futures' March Highs
European gas prices exhibited a substantial surge, with UK gas prices escalating by 25%, and EU natural gas soaring by as much as 40% before stabilizing around a 25% increase. The catalyst for this upward trajectory was a strike in LNG facilities in Australia, given its position as the second-largest LNG exporter globally. These dynamics propelled EU gas futures to approach the March highs, edging near $3 per cubic foot, while inviting speculation of a further advance towards $3.30/cf.
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