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08/09/2023 - 08:24 UTCThe U.S. dollar continues to move higher on Thursday, with the USDX touching new multi-month highs and temporarily crossing the 105.0 mark. According to Reuters, emerging market currencies will have a hard time recovering their lost ground against the dollar this year, as high U.S. Treasury yields, dollar safe-haven demand and expectations that the Fed will maintain its hawkish stance keep the dollar ascendant. Since the beginning of this week, the USD/INR is currently trading around 0.34% higher, the USD/CNH is up by 1.25%, and USD/ZAR gained by approximately 1.5%.
Energy prices surged this week, with WTI trading up by 7.35% while Brent posted a mild correction and is seen at 0.88% as of 07:37 AM GMT Friday. Investors are trying to assess conflicting data as economic activity in China, the world’s biggest crude importer, disappointed the markets however, the negative impact was limited by decisive stimulus measures by the People’s Bank of China as well as aggressive supply cuts by Russia and Saudi Arabia.
Precious metals took a hit this week by the recent strength in the dollar and rising treasury yields with gold declining by around 0.80% so far this week while silver fell by a significant 4.67% on the weekly chart.
Corrective action continues in the main US stock indices on Thursday, for a third consecutive session, with the US 500 down by 0.30% and the US tech 100 falling by 0.71%, however, the US 30 posted a mild 0.23% recovery. The technology sector took some pressure from Apple because of concerns about iPhone sales in China. In addition, the majority of small cap stocks fell badly with many names currently trading at yearly lows. There is no major catalyst on the horizon right now to shift sentiment, but next Wednesday is the consumer price index report that will be a market mover.
In the spotlight for Friday is Canada’s jobs market, as reports are due for employment change and the unemployment rate. later on, some price action could be seen as the US will releases reports on final wholesale Inventories and consumer credit.
The EUR/USD dropped on Thursday and recorded its lowest daily close in three months, near 1.0700 posting daily losses of 0.25%.
Data from the Eurozone showed a positive employment change of 0.2% during the second quarter (unrevised), while GDP was revised lower from 0.3% to 0.1%. A different report indicated that Industrial Production in Germany dropped by 0.8% in July, exceeding the expected decline of 0.5%.
In US, Initial Jobless Claims dropped to 216K, below the market consensus of 234K for the week ending September 1.
Gold prices edged higher on Thursday, as a slight pullback in Treasury yields offered some respite from a robust dollar, while investors looked forward to more U.S. economic data to gauge the outlook for interest rates.
Gold held steady after briefly trimming later in the session as data showed tightness in the U.S. job market, with focus now shifting to a host of Federal Reserve speakers for cues on interest rate hikes.
Oil prices fell on Thursday, with the WTI contract ending the session 1.08% lower on the iFOREX platform as a mix of profit taking, strength in the dollar and fears of an economic slowdown in major consumers weighed.
Crude prices retreated on Thursday, shrugging off a positive U.S. inventory report and strong Chinese import figures. But strength in the dollar, appeared to have taken some wind out of the crude rally, especially as signs of resilience in U.S. inflation and the labour market fed concerns over rising interest rates in the country.
U.S. stocks were mixed, with declines led by tech stocks, as investors continued to worry about interest rates remaining higher for longer.
Despite small gains of 0.23% in the US 30, the US 500 and US Tech 100 were down 0.30% and 0.71% respectively at the end of the session, with the biggest drag being Apple and a sell-off in chip stocks over concerns about China's iPhone curbs.
In addition, a fall in weekly U.S. jobless claims fed worries about interest rates and sticky inflation. The Fed has been closely watching the labor market for signs that the tight conditions are easing, something it wants to see to prove its inflation fighting efforts are working.
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