News

Soft US Data Dips Dollar, Pound Recovers

USD

The dollar index which measures the greenback against a basket of major currencies retreated from a more than two years high of 99.37 to trade lower at 98.85 on weaker US data. The ISM Manufacturing PMI dropped to 49.1 in August, the lowest activity since February 2016. The soft data intensified the chances of further interest rate cuts by the Federal Reserve in the coming meetings. Market participants are looking forward to more economic data coming out this week to grasp hints about economic performance. The US 10-year yields settled at 1.464%, the USDJPY dropped to 105.92, and the EURUSD bounced-off the lows to trade at $1.0985.

GBP

The British pound recovered losses amid rising chances of a Brexit delay. Johnson's government lost key vote 328 to 321, giving the opposition lawmakers a chance to pass a bill seeking to delay Brexit beyond 31st of October. As a response, Johnson will likely bring forward an election motion. The recent developments reduced the chances of a no-deal Brexit, which was positive for the pound. However, a Brexit delay or general election will lead to an extended period of uncertainty. The GBPUSD climbed to a high of $1.2143, and the GBPJPY edged higher to 128.93.

Metals

Gold prices soared to a high of $1550 following weaker-than-expected US economic data. The precious metal gained on the fact that soft data would force the Federal Reserve to ease further the monetary policy. However, gold prices surrendered partial gains as investors were seen jumping into riskier assets such as US stocks which rallied on hopes of further stimulus. Meanwhile, silver hit a fresh three-year high of $19.57, and palladium advanced to five-week high $1550.

Oil

Oil prices finished lower for the third consecutive day weighed down by investors’ concerns over the global economic outlook. The weakening economic data around the globe and fears of another round of trade tensions between China and the United States sent oil prices lower. The West Texas Intermediate crude futures dropped to $52.82, and Brent futures dipped to 57.21. However, the benchmarks recovered partial losses on further monetary policy easing prospects.

Major Economic Events

GMT Country Event Expectation Previous

8:00

EU

German Services PMI (Aug)

54.4

54.4

8:30

UK

Services PMI (Aug)

51.0

51.4

9:00

EU

Retail Sales (YoY) (Jul)

2.0%

2.6%

14:00

CA

BoC Interest Rate Decision

1.75%

1.75%

18:00

US

Beige Book

 

 

20:30

US

API Weekly Crude Oil Stock

 

-11.1


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