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At the beginning of the week the U.S. dollar was trading clearly stronger against most other major currencies with the greenback now in its strongest position in two decades against other majors like the euro (EUR) and the Japanese yen (JPY). In emerging markets the picture was a bit mixed. While the USD/ZAR pair moved up to a new two-years high, the USD/MXN pair remained on Monday morning almost unchanged after a noticeable drop on Friday. The USD/TRY pair meanwhile continued to very gradually move to new year-to-date as it did already over the past two weeks.
Crypto markets overall remained fairly steady with the total market cap still estimated to be just above a trillion dollars. On a weekly basis Bitcoin was almost unchanged, while Ethereum traded also sideways over the past few days.
After most major equity market indices were under pressure on Friday, the trend was somewhat mixed in different regions by Monday morning. U.S. indices like the US Tech 100 and US 500 were almost unchanged in light holiday trading, while the Japan 225 (Yen) moved to the upside. Meanwhile European indices like the Germany 40 and Europe 50 continued to decline despite the already weakened euro.
On Monday morning Swiss GDP data for the second quarter as well as eurozone retail sales and composite PMI statistics can be expected.
While on Friday the EUR/USD pair managed to stabilise its position and did not further decline after the weak trading session on Thursday, a strong downside started just as markets reopened following the weekend break. In the following hours the EUR/USD pair fell to the lowest level in two decades below the 0.99-threshold. Clearly the overall strength of the dollar had an impact on this market move, though at the end it came down to the weakness of the common European currency, which on Monday was trading weaker against all other major currencies.
Some see the announcement from Russia to fully suspend natural gas deliveries through Nord Stream 1 as a key development possibly responsible for this market move, while there are questions how much if at all measures like price caps on Russian energy exports or like in Germany decisions to curb excessive gains from energy companies will help secure the much-needed energy resources. The high costs of energy already has real economic impact as for example on Friday it was reported that ArcelorMittal would shut down blast furnaces in Germany as high gas and electricity prices make continued operations for now unprofitable.
Relatively few major fundamental data releases are also expected from Europe on Monday besides the retail sales and composite PMI numbers for the eurozone. Further data releases down the line are manufacturers' orders data from Germany due on Tuesday, eurozone GDP on Wednesday and the monetary policy decision by the European Central Bank (ECB) on Thursday.
Gold prices rebounded on Friday and even though the dollar continued to rally, pushing the USDX index to a new high gold prices continued rising by Monday morning, recovering well above the $1,700 threshold. Given the significant weakness of the euro over the past days, the price of Gold (EUR) CFDs was by Monday morning up by more than 1.5% compared to level early on Friday last week.
Silver prices also recovered a bit, though the weekly commitment of traders (COT) report released by the U.S. CFTC on Friday showed a further decline of net speculative positions in silver futures to -8.3 thousand, which is the lowest level in more than three years.
WTI crude oil traded on Friday lower for the fourth trading day in a row, though after the markets reopened from the weekend break a moderate upside was recorded the price remains still below $89 for a barrel of WTI crude. One of the key developments to watch on Monday will be the meeting of OPEC+ countries' representatives where the organisation is set to decide on its quota for the coming month. Reuters quoted multiple people involved in the discussions indicating that a small output cut could be possible, while Russia recently publicly opposed such measures.
The U.S. Baker Hughes Oil Rig Count that was as usual published on Friday indicated a drop in activity as only 596 (previously 605) oil rigs have been in operation.
Due to the American Labour Day holiday on Monday, the release cycle of the weekly statistical bulletin by the American Petroleum Institute (API) will be pushed back by one day to Wednesday, while the weekly petroleum status report by the Energy Information Administration (EIA) is set for publication on Thursday.
Major stock market indices like the US 500 were once again under pressure on Friday, closing for the fourth time that week lower. Markets reversed lower in the afternoon after initially heading to the upside around 12:30 PM GMT on Friday as bad fundamentals were seen once again as bullish as some might assume that bad news might loosen the Fed's monetary tightening approach, while good news can be seen as bad for the markets as that might embolden the Fed to continue with its hawkish policies. The unemployment rate unexpectedly rose to 3.7% in August (previous and expected 3.5%), while non-farm payrolls at 315 thousand jobs added barely exceeded expectations. At the same time the hour work week declined by 0.1 hours to 34.5 hours and average hourly earnings only increased by 0.3% on a monthly basis (previous 0.5%).
Lululemon Athletica (+6.62%) was by far the best-performing component of the S&P 500 index that day as the company clearly exceeded both on earnings and revenue with the latter amounting to $1.87 billion, which means an increase of 29%. The company also disclosed that its tore traffic increased by more than 30 per cent, while ecommerce traffic was up by even more than 40 per cent.
With the earnings season mostly over rather few companies are yet to disclose their earnings this week, which will include Nio and GameStop on Wednesday followed by Bilibili and DocuSign on Thursday.
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