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The U.S. dollar was relatively stable on Thursday, ending the session moderately higher against most major currencies, with the dollar index (USDX) fluctuating within a tight range between 109 and 109.67 for the past two days. Against most emerging market currencies, the USD pushed higher to end the day close to all-time highs against the INR and the TRY.
Crypto markets took another hit on Thursday, with the global cryptocurrency market cap remaining below the 1 trillion mark while the Bitcoin posted another day in negative territory trading 2.5% lower and below the $20,000 mark at the end of the day. Ethereum, the world’s second-largest cryptocurrency, fell by more than 10% reaching its lowest level this month after its highly anticipated switch to proof-of-stake was successfully executed.
U.S. and European market indices also sank on Thursday, with the main US stock indices hitting lows last seen in July as the latest series of fundamental releases failed to alter investor expectations of an aggressive monetary policy tightening by the Federal Reserve in its upcoming meeting.
On Friday, Italy will announce data on its trade balance and the eurozone will be releasing its annual Final CPI and Final Core CPI figures. Later in the day, the US will announce results from the University of Michigan surveys on Preliminary Consumer Sentiment and Preliminary Inflation Expectations.
The EUR/USD pair traded between gains and losses on Thursday, ending the day almost unchanged for yet another day, trading close to its weekly low of 0.9956 seen on Tuesday.
Thursday’s economic releases failed to bring significant volatility to the markets despite some positive figures from the U.S. including a rise in U.S. retail sales for August by 0.3% and a decrease in weekly unemployment claims.
According to some market analysts, economic figures so far help solidify the overall consensus that the Fed will continue with more aggressive rate hikes in the near term.
Gold prices continued to decline at a rapid pace after a support level around $1,690 was breached. With gold prices down for the third day in a row, the precious metal is also set to end the week deep in the red as it is traded at the lowest levels since April 2020. The major downturn occurred during the afternoon on Thursday just as equities also came under pressure. Silver prices also turned lower, though even with the losses from Thursday silver is still on track to end the week once again higher. Meanwhile platinum and palladium prices remained close to unchanged.
As usual on Friday the U.S. CFTC publishes its weekly Commitment of Traders (COT) report, which also contains information on the net speculative positions of traders in the futures markets on underlying like gold, silver and copper.
The uptrend in the oil market that has been in place for about a week was broken on Thursday with the price of WTI crude oil falling within just one day by almost five per cent. Prices of energy commodities such as crude oil and natural gas (Henry Hub) gradually declined as it became known that a rail strike in the U.S. was for now averted following a temporary agreement. There were concerns that with the already tight market conditions and bottlenecks, that a rail strike could further exacerbate the situation.
On Friday the U.S. Baker Hughes Oil Rig Count statistic will be published. Over the past two consecutive weeks a noticeable decline in the number of operating oil rigs could be observed and after a peak at 605 rigs was reached by late July, no new post-corona record has yet been seen.
Major stock market indices in the U.S. like the US 500 and US Tech 100 ended the session on Thursday clearly in the red and thus have undone practically all the gains from the bullish session on Wednesday. The somewhat mixed results in terms of fundamental data coming out on Thursday was said to have been a factor affecting the market sentiment as there is still significant uncertainty when exactly the Fed will stop to tighten its monetary policy. Retail sales improving by 0.3% on a monthly basis in August and weekly jobless claims falling to 224 thousand were overall positive, though these developments were offset by weak industrial production data which showed an unexpected drop of activity by 0.2% while import and export prices remained at an elevated level of +7.8% and +10.8% y/y respectively.
Adobe (-16.97%) was by a wide margin the worst-performing component of both the S&P 500 and NASDAQ Composite Index with further losses being recorded in the extended trading session. While the company reached a new record in terms of revenue at $4.43 bn. which represents a 13% y/y increase and the earnings per share (adjusted) at $3.40 were said to have been above expectations, investors seemed not to be particularly excited about the announcement that the company would acquire Figma a collaborative web application for interface design in a deal valued around $20 bn.
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