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15
Sep

U.S. Retail Sales, Philly Fed Manufacturing, Unemployment Claims

calendar 15/09/2022 - 06:57 UTC

The U.S. dollar appeared to be somewhat stable on Wednesday following a sharp recovery the day before, with the dollar index (USDX) trading in a tight range between 109 and 109.4 late in the session. Most emerging market currencies including the INR, the ZAR and the TRY managed to end the day moderately higher against the US dollar.

Crypto markets took another hit on Wednesday, with the global cryptocurrency market cap falling for a short while below 1 trillion while the Bitcoin was trading in a range between levels $19,860 and $20,929. Other major cryptocurrencies were trading mixed with no significant moves seen throughout the day. Markets are waiting to see the impact from the upcoming Ethereum update called “the Merge” that aims to shift the blockchain towards proof-of-stake consensus.

U.S. and European market indices seem to be struggling for gains on Wednesday, with the majority ending the day almost unchanged, following Tuesday's plunge which marked their largest percentage drop in more than two years.

On Thursday a series of significant fundamental releases are due from the US including among others, retail sales, the Empire state and Philly Fed Manufacturing reports, weekly Unemployment Claims, monthly industrial production data and Natural gas storage. Earlier in the day, the UK will also be releasing its consumer inflation expectations, and the Eurozone will publish reports EU trade balance and French CPI m/m.

EUR/USD

The EUR/USD pair traded between gains and losses on Wednesday, ending the day almost unchanged, following a sharp drop the day before as higher-than-expected inflation figures raise expectations for another big hike in interest rates from the Federal Reserve when its policymakers meet next week.

According to several market analysts, markets have already priced in a high possibility that the Fed will raise rates by 75 basis points next week, but the chance of a full 1% rate increase is now also on the table.

EUR/USD

Gold

Gold prices extended their decline for a second consecutive session, trading close to the $1693 per ounce mark by the end of the US session. This move could possibly be supported by rising treasury yields as well as expectations that the Fed might proceed to a more aggressive rate hike in its upcoming meeting. Other precious metals recovered moderately, gaining back part of the losses seen in the previous session.

The Labor Department's producer prices (PPI) data were reported close to estimates and provided some relief in the aftermath of Tuesday's CPI figures which came in higher than anticipated.

Gold

WTI Oil

Oil prices ended Wednesday’s session in positive territory and appear to be back on track to revisit highs seen in the end of August.

The price of the fuel saw some pressure by data released from the Energy Information Administration, which showed U.S. crude and distillate inventories rose more than expected in the most recent week, suggesting weaker fuel demand and putting cap on oil prices.

In addition, the International Energy Agency (IEA) stated that it expects a widespread move from gas to oil for heating purposes, estimating an average of 700,000 barrels per day (bpd) in October 2022 to March 2023, which is double the level of a year ago.

Potential disruptions in U.S. crude supply, deriving from a possible rail stoppage due to an ongoing labour dispute, could support prices in the near-term.

WTI Oil

US Tech 100

Major stock market indices like the US 30 and US Tech 100 ended modestly higher Wednesday as investors attempt to recover losses from the biggest single-day decline in more than two years following a surprisingly strong inflation reading in the US.

The Fed still seems to have a long way to go before it approaches the 2% inflation milestone, while investors are now pricing in the possibility for an interest rate hike of at least 75 basis points at the conclusion of the FOMC's policy meeting next week. They see a 22% likelihood of a 100 basis-point increase, according to CME's FedWatch tool.

In tech stocks, Apple Inc also recovered a small share of its earlier losses, rising by 0.94% while Microsoft Corp and Twitter Inc remained almost unchanged, and Meta Platforms Inc extended its losses by another 1.21%.

On Thursday Adobe is set to publish its quarterly results.

US Tech 100

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