US stocks started the session with declines as the continued trade tensions between the United States and China weigh on the stock market. Trump administration proposed a %25 tariff on $200 billion of Chinese imports. However, US indices recovered from multi-week lows supported by tech sector as Apple surpassed a market cap of $1trillion dollar. The SPX500 bounced-off a two-week low of 2791 to settle at a one-week high of 2827. The Dow Jones Industrial Average recovered from a one-week low of 25087 to end the session slightly lower at 25326. The tech-heavy Nasdaq Composite was the top performer and gained more than 1% to close at 7802. US stocks remain vulnerable to headlines regarding trade tensions and a further rise in US treasury yields.
The dollar index which measures the strength of the greenback against a basket of major currencies finished higher for the third consecutive day. DXY traded at a fresh two-week high of 95.23 during the Asian session. Dollar traders await the job report from the United States. A higher reading in average hourly earnings will provide support to the Federal Reserve in proceeding with further rate hikes. The Fed declared on Wednesday that strong labor market conditions, better wage growth, and higher inflation will lead to more rate hikes. EURUSD traded near a one-month low at $1.1576 as Europe goes to trading. The dollar also rose to a fourteen-month high against the Chinese Yuan to reach 6.8795.
The British Pound tumbled to a two-week low of $1.2983 despite the interest rate hike by the Bank of England. The bank of England raised interest rates by 25bps to 0.75% as the market expected. The Cable slumped post the comments of the BoE governor, Mark Carney. Carney said that the rate hike was the right decision, but he addressed the risks from Brexit which could hurt the UK economy and lead to changes in the monetary policy. Moreover, he said that rates might not reach 2-3% anytime soon as the market conditions changed and the bank could stick to raising rates one time per year to maintain inflation target.
Gold prices fell to a fresh 2018 low as the United States Dollar strengthened. The gold bullion traded at a low of $1205 during the Asian session. Gold traders will focus on the earnings in the jobs report, as a stronger reading could confirm higher interest rates which indicate higher treasury yields. The precious metal was depreciating since the start of the second quarter as US treasury yields reached a multi-year high, making bonds more attractive than gold. On the other hand, the silver ounce is trading near the lowest level since April 2016 at $15.25.
Oil prices rose yesterday to recover from the two-day sell-off that occurred after the crude oil inventories data. The American Petroleum Institute (API) and the Energy Information Administration (EIA) reported a rise in the US crude inventories which pressured oil prices for two consecutive days. The prices recovered yesterday, and the crude futures settled higher at $68.96 per barrel whereas the Brent futures rallied to a high of $73.71 per barrel.
Major Economic Events
|08:30||UK||Services PMI (Jul)||54.7||55.1|
|09:00||EU||Retail Sales (MoM) (Jun)||0.4%||0.0%|
|12:30||US||Nonfarm Payrolls (Jul)||193||213|
|12:30||US||Unemployment Rate (Jul)||3.9%||4.0%|
|12:30||US||Average Hourly Earnings (YoY)(Jul)||2.7%||2.7%|
|14:00||US||ISM Non-Manufacturing PMI (Jul)||58.6||59.1|
|17:00||US||U.S. Baker Hughes Oil Rig Count||861|
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