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The U.S. dollar was trading stronger against most other currencies on Tuesday, including emerging market pairs like the USD/ZAR, the USD/INR and the USD/TRY with the latter recovering from five-week lows seen the day before.
Sentiment in the crypto markets was mostly negative, with the global cryptocurrency market cap close to 1.01 trillion, down by more than 4.73% in the last 24 hours and Bitcoin falling back below the $22K mark and ending the day approximately 7.3% lower on the iFOREX platform. Most major cryptocurrencies by market cap were trading mixed.
U.S. and European market indices reversed most of the gains seen on Monday with the Germany 40, the Europe 50 and France 40 U.S. losing by more than 1.5% while in the US Tech 100 and US 500 posted losses of 4.5% and 3.4% respectively.
On Wednesday in the U.S. the PPI and the core US PPI for August will be published. The overall expectations point towards a higher Core PPI (previous +0.2% m/m) while the PPI is also expected to increase (previous -0.5% m/m). Earlier in the day, the UK will also be releasing a series of inflation indicators while in the Eurozone, monthly industrial production data are due.
The trend for a stronger dollar seems to be revisiting the markets with the EUR/USD pair ending Tuesday below parity once more, following three-week highs posted earlier this week. This market move can be mostly attributed to August’s inflation report that came in higher than expected.
The consumer price index for August showed inflation rose 0.1% from July despite the drop in the price of gasoline. From last year, inflation was up 8.3%, while analysts had expected an 8.1% print.
Gold prices posted a sharp drop on Tuesday, opening the day at $1726 per ounce only to close below the $1700 mark. This move was mainly attributed to recent strength seen in the dollar and rising treasury yields after data showed U.S. consumer prices rising faster than expected in August, prompting bets for more aggressive Federal Reserve rate hikes.
The same trend was seen in other precious metals as well with silver and platinum down by almost two per cent and palladium plunging by more than seven per cent.
Oil prices ended Tuesday moderately lower, following gains seen in the past three days as the Energy sector could possibly be affected by recent gains seen in the US dollar.
OPEC remained loyal to its earlier forecasts for robust global oil demand growth in 2022 and 2023, citing major economies and the fact that they appear to be doing faring better than expected despite the recent surge in inglation.
One of the geopolitical developments possibly also affecting the oil markets was that prospects for a possible deal with Iran on its nuclear program appear to be fading. Germany expressed regret on Monday that Tehran had not responded positively to European proposals to revive the 2015 agreement.
As usual on Wednesday the Energy Information Administration (API) publishes its weekly inventory report, which also includes data on changes in crude oil, gasoline and distillate stockpiles.
Major stock market indices like the US 30 and US Tech 100 were tumbled on Tuesday, ending a four day winning streak as the US consumer price index for August showed inflation rising more than expected despite the drop in the price of gasoline. From last year, inflation was up 8.3%, while analysts had expected an 8.1% print.
The sell-off hit tech stocks particularly hard, with Apple Inc and Microsoft Corp down by almost 5% each, while shares of Meta Platforms Inc dropped by more than 8%. Twitter Inc shares posted moderate gains despite news that a whistleblower prepared to testify to the Senate about his claims of security lapses at the social media company.
On Thursday Adobe is set to publish its quarterly results.
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