News

Dollar Falters on Soft Economic Data

Dollar

The dollar index, which measures the greenback against a basket of major currencies, tumbled to 92.78 following weak economic data. The Building Permits and Housing Starts for August came out well below expectations, the Philadelphia Fed Manufacturing Index eased to 15, falling for the fourth straight month, and the US Initial Jobless claims rose by 860 thousand, slightly above estimates. The soft data raised investors woes over the strength of the economic recovery, especially as Powell affirmed in his presser on Wednesday that the activity remains well pre-pandemic levels. A series of soft data prints could trigger further action from the Federal Reserve. The US 10-year yields declined to 0.646%, the EURUSD reversed to $1.1869, and the GBPUSD rallied to $1.2999.

Equities

Major US stock index futures trimmed earlier losses but remained under pressure. The weak economic data are adding to investors' woes over the economic recovery, while also Biden's plan to raise the corporate tax is weighing on sentiment. The latter plans to raise the corporate tax to 28% from 21%, which would be in the middle range between the current 21% and the previous 35%. The Dow Jones Industrial Average futures eased to 27643, the S&P500 futures drifted lower to 3330, and the Nasdaq futures dipped to 11021.

GBP

The British pound had a roller-coaster ride following the Bank of England monetary policy meeting. The bank kept policy unchanged with a vote of 0-0-9, asset purchases total remained at £745 billion and interest rates at their historically low level of 0.10%. However, the Monetary Policy Committee discussed the ways to implement negative interest rates, especially as the bank is looking for more tools to act if the economic outlook deteriorates due to Brexit issues or COVID19. The pound tumbled sharply following the statement as negative interest rates were taken into consideration, but managed to recover losses during the US and Asian session, as the dollar lost ground. Currently, the GBPUSD is hovering near $1.30, and the GBPJPY is trading near 135.60.

Metals

Gold prices inched higher as the dollar lost ground along with US yields following soft economic data. The price of a gold ounce rose to $1955, the price of a silver ounce rallied to $27.26, and palladium futures trimmed losses rising to $2364.

Oil

Oil prices shed higher as investors are anticipating that US storms will weigh on the production. Meanwhile, OPEC+ Joint Ministerial Monitoring Committee agreed to extend the overproduction compensation period till December. The West Texas Intermediate crude October delivery rallied to $41.47, and Brent Blend November delivery raced higher to $43.79.

Major Economic Events

GMT Country Event Expectation Previous

12:30

CA

 Retail Sales (MoM) (Jul)

1.0%

23.7%

14:00

US

Michigan Consumer Sentiment (Sep) 

75.0

74.1

17:00

US

 U.S. Baker Hughes Oil Rig Count

-

180

Disclaimer

The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM.COM. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

CFDs and Spot FX are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.03% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs and Spot FX work, and whether you can afford to take the high risk of losing your money. Read More
Read More
Mail Call Chat