Spreadex Market Update
USD Slips Back From Fresh 20-year Highs, Traders Await Consumer Confidence Data
The US Dollar softened yesterday after initial strength. The Dollar Index was seen breaking out to fresh 20-year highs before sellers stepped in and drove price lower. With nothing on the data sheet yesterday, the moves appear to be largely technical, with some profit taking occurring. USD sentiment remind buoyant following Fed chairman’s Powell’s warning on Friday that rates might need to stay higher for longer in response to the inflationary environment. Today, USD traders look to the latest CB consumer confidence number for last month, along with the JOLTS jobs opening data. We’ll also hear from Fed’s Williams.
Key Factors for Today
- USD slips back following initial strength on the week
- US consumer confidence up next
- Equities markets recover, helped by USD weakness
- Light data sheet again today – focus will be on USD movement
- AUD & GBP recover in FX, EUR driven by hawkish ECB expectations
- Gold and silver continue lower while oil rebounds
Coming Up
- EUR Preliminary German CPI
- USD US CB Consumer confidence
- USD US JOLTS Jobs openings
Equities Prices Stabilise As USD Softens
Equities markets managed to bounce back off the lows yesterday, benefiting from the shifting USD tone we saw. Most indices traded heavily lower in the wake of Powell’s comments on Friday and began the week with a similar tone yesterday before stabilising as USD reversed. A quiet data sheet today will see markets focused on the two USD releases we have due with the near-term outlook for equities markets largely tied to USD movement.
GBP & AUD Recover in FX, Safe-Havens Weaken
In FX, the reversal in USD from yesterday’s highs has allowed for a recovery in key areas. GBP and AUD have both bounced back, as has EUR. The better tone to risk sentiment today is helping lifting these currencies while safe-havens, USD, JPY & CHF are seeing weaker flows. CAD has also been firmer today, helped by better crude prices as the pull-back in USD helps lift commodities prices also. On the data front, German CPI will be closely watched today as traders look to gauge the ECB’s response at the upcoming September meeting. Following a hawkish set of ECB minutes, traders are now grappling with the prospect of a larger-than-75bps move from the bank.
Gold & Silver Slip Lower While Oil Rebounds Higher
In the metals and commodities space, we’re seeing some divergence so far today. While crude prices are trading firmly, breaking out to their highest levels since early August, both gold and silver are continuing lower. Metals have been under consistent selling pressure of late and Powell’s comments on Friday did little to help the near-term outlook. While gold prices are sitting above the weekly lows for now, the tone remains heavy and further losses look likely over the week as we head towards the key US data on Friday.
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