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8
Sep

ECB Rate Decision, U.S. Jobless Claims, Consumer Credit

calendar 08/09/2022 - 09:01 UTC

The sentiment in the FX markets was somewhat mixed on Wednesday. While the U.S. dollar strongly retraced from its recent high in the USDX index, the USD/JPY rate still ended the day once again higher. Among emerging market pairs also different trends were seen. While the USD/MXN pair moved lower, USD/ZAR and USD/CNH pairs remained almost unchanged and the USD/TRY pair remained close to its recent year-to-date high.

Precious metals like gold, silver and platinum traded higher on the weakened dollar with gold prices moving again above the $1,700-threshold, while silver was up above $18.5 by Thursday morning.

Equities traded overall higher on Wednesday. By Thursday morning major markets in Europe and the U.S. like the Europe 50 and US Tech 100 were almost flat while mixed results were seen in Asian markets. The Japan 225 (Yen) continued to push higher, while the China A50 index retraced with a move that undid practically all the progress made on Wednesday.

On Thursday in the U.S. weekly jobless claims numbers will be published, followed by consumer credit statistics for July.

EUR/USD

Just as the dollar started to significantly weaken from its recent position of strength in the early afternoon, the EUR/USD pair managed to recover and push above the parity level. By Thursday a support level around the 0.998-0.999 was mostly held.

Fundamentals from the eurozone were relatively positive on Wednesday with the second quarter GDP growth for the eurozone reported at 0.8% on a quarterly basis, which was clearly better than anticipated. German industrial production declined in July by 0.3% on a monthly basis, though that as well was still better than expected, while Italian retail sales showing a growth rate of 1.3% were a clear surprise after the drop of 1.1% in June.

One of the key events on Thursday could be the monetary policy decision by the European Central Bank (ECB) with the consensus among analysts and economists indicating a rate hike between 50 and 75 basis points.

EUR/USD

USD/JPY

Despite the relative weakness of the dollar, the USD/JPY rate moved up to yet another record high in this millennium with the exchange rate up by more than three per cent at its peak on Wednesday compared to the closing levels of last week. The Japanese yen continues to face pressure just as the Bank of Japan still indicates commitment to its yield curve control, which causes the currency to devaluate against other majors as central banks practically across all major developed countries have been raising rates this year in order to bring inflation under control.

Later on the rate started to retrace a bit lower, while a brief recovery was seen around the time the Japanese GDP data for the second quarter was published, indicating an annualized growth rate of 1.6% in the second quarter.

USD/JPY

WTI Oil

Oil prices continued to decline at a rapid pace with WTI crude oil down by 5.5% on Wednesday bringing the price of oil on track to move lower for the fourth month in a row and well below the levels seen before the conflict with Russia began in late February.

Prices were relatively steady in the evening hours when then weekly statistical bulletin was published by the American Petroleum Institute (API) indicating a build in crude oil stockpiles of 3.6 million barrels over the past week.

On Thursday the weekly petroleum status report will be published by the Energy Information Administration (EIA), which will also include data on changes in crude oil, gasoline and distillate stockpiles.

WTI Oil

US 500

Major stock market indices like the US 500 had their best daily performance on Wednesday in weeks with the index up by 1.8%, while the US Tech 100 index was up by 2.1%.

Stock performance was among most economic sectors highly bullish with few exceptions like the energy sector (US Energy ETF -1.20%) just as crude oil prices continued to decline at a rapid pace.

GameStop stocks managed to recover the sizable losses from the regular session and trade by the end of the after-hours session up by more than six per cent. This came even after the company disclosed lower sales and widened losses in the past quarter as well as an inventory build. CNBC reported that results cannot be easily compared to analysts' expectations due to the lack of analyst coverage. The company announced a partnership with FTX, which is one of the leading crypto exchanges just as GameStop recently launched its own NFT marketplace. The GameStop stock has been hyped a lot in the internet community for a few years as that community wanted to "win" against institutional investors holding short positions in that stock.

SolarEdge (+12.01%), a company that offers inverters for photovoltaic solar systems was one of the best-performing stocks in the market on Wednesday and the best-performing component of the S&P 500 index that day.

US 500

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