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30/08/2023 - 07:51 UTCThe U.S. dollar continues downwards on Tuesday, after U.S. employment and consumer confidence data came out weaker than expected, with the USDX ending the day 0.52% lower. A similar move was observed against some emerging market currencies with the USD/ZAR down by 0.57% and the USD/CNH declining by 0.11%, however, USD/MXN and USD/INR rose by 0.09% and 0.13% respectively.
Energy prices rose sharply on Tuesday, with WTI ending the day 1.63% and Brent gaining by 1.30% on the iFOREX platform. Part of the move could be attributed to a large decline in crude inventories in the U.S., the world's biggest fuel consumer, as well as renewed concerns for possible supply disruptions due to a hurricane in the Gulf of Mexico.
Following the weaker than fundamentals gold prices jumped to monthly highs on Tuesday, partly supported by weakness in the dollar as well as Treasury yields easing off from 20-year highs. The yellow metal rose by 0.78% for the day, while silver added a solid 2.07% on its value.
The main US stock indices also surged on Tuesday with the US 500 up by 1.49%, the US 30 rising by 0.85% and the US tech 100 gaining 2.24%. Even though economic releases from the US were weaker than anticipated, this could cause the Fed to reconsider its aggressive monetary policy stance and maybe even put a possible rate cut on the table. Technology stocks Tesla and Nvidia were some of the main beneficiaries of this development.
Following the latest hawkish fundamentals from the US, markets were surprised to see the JOLTS survey reporting that the number of job openings stood at 8.827 million in July, falling for the third straight month while at the same time, the Conference Board showed that consumer confidence in the United States fell to 106.1 in August, compared with expectations of 116.
For Wednesday, the focus could turn to Spain and Germany as they release their monthly inflation data while later in the day U.S. ADP employment report, GDP and pending home sales data are due. Several more U.S. economic indicators are up this week, including personal consumption expenditures and nonfarm payrolls data.
The EUR/USD pair posted a sharp increase on Tuesday ending the session 0.40% higher. The primary driver of the EUR/USD rally was the weakening of the US Dollar.
In Eurozone, data released on Tuesday shows that the German GfK Consumer Confidence Survey dropped to -25.5 in September, below the expected -24.3. In terms of upcoming economic data, Wednesday will be a critical day with the release of preliminary Consumer Price Index (CPI) figures from Spain and later from Germany.
The pair weakened after disappointing employment data from the US, including the JOLTS report, and lower-than-expected numbers from the CB Consumer Confidence index. On Wednesday, US data to be released includes the ADP private employment report, ahead of Friday's Nonfarm Payrolls.
Gold prices on Tuesday hovered near their highest levels in three weeks ending the session 0.78% and closing the day just above the $1935.00 per ounce levels. After the lacklustre U.S jobs openings and consumer confidence data eased bets of interest rate hikes by the Federal Reserve this year.
U.S. job openings dropped to the lowest level in nearly 2-1/2 years in July as the labor market gradually slowed. U.S. consumer confidence fell more than expected in August after two straight monthly increases amid renewed concerns about inflation, a survey showed on Tuesday.
U.S. Treasury yields dropped to three-week lows on Tuesday after the data and the dollar also weakened, making gold less expensive for other currency holders.
Oil prices rose in on Tuesday, extending gains from the prior session on signs of a massive draw in U.S. crude stockpiles, while focus also remained on any potential supply disruptions stemming from Hurricane Idalia.
The WTI contract on iForex platform ended the session 1.63% helped by a drop in the dollar as data yesterday showed some cooling in U.S consumer confidence and labor market. But bigger gains in prices were held back by uncertainty over rising global supplies and potentially worsening demand.
Focus is now on a string of key economic readings from the world’s largest oil consumers, due later in the week.
U.S. stocks were higher after the close on Tuesday, as gains in the Telecoms, Technology and Consumer Goods sectors led shares higher.
All three major U.S stock indexes ended the session sharply higher with the US 500 and US 30 ended the session 1.49% and 0.85% higher respectively while US Tech 100 posted daily gains of 2.24%.
U.S. economic indicators released on Tuesday showed dampening consumer sentiment and job openings dropping to their lowest level since March 2021
Ahead in Wednesday's trade, market participants will be watching for ADP nonfarm employment change and pending home sales data, as well as preliminary GDP figures, goods trade balance, and wholesale inventories.
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