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23/08/2023 - 10:04 UTCThe U.S dollar posted a mild recovery against most major currencies on Tuesday, with the USDX ending the day 0.28% higher as market participants look ahead to the Jackson Hole, Wyoming symposium for possible hints on the Fed’s future monetary policy plans. The dollar however gave mixed results against emerging market currencies with the USD/ZAR declining by 0.92% while USD/CNH and USD/INR gained by 0.22% and 0.18%.
Energy prices continue to move deeper in the negative on Tuesday, with WTI and Brent ending the day down by 0.57% and 0.81%. The impact from the central bank of China that announced less aggressive than anticipated stimulus measures still seems to be adding pressure on prices along with a slew of recent indicators pointing to a slowing economic recovery in the world’s largest oil importer.
Precious metals prices posted a second consecutive session of gains on Tuesday, recovering from multi-month lows reached last week as the dollar appears to be gaining ground and as current prices seem to have triggered some bottom buying. Gold prices rose by another 0.20% on Tuesday and continue to rise further early on Wednesday while silver added 0.53% to its value on Tuesday.
Following a series of daily losses since the beginning of this month, the main US stock indices appear to be stabilizing at current levels, moving sideways for the past two sessions, with the US 500 down by 0.11%, the US 30 falling by 0.35% and the US tech 100 0.06% higher on Tuesday. In the spotlight for Wednesday are the quarterly results from the world's most valuable chipmaker Nvidia that are due to be reported after the market closes. Nvidia surprised investors with its strong forecast in May, fuelling a rally in its own and other tech stocks amid artificial intelligence hopes.
Some price action could be seen later today as several of economic releases are due including the release of US, UK and eurozone flash services and manufacturing PMIs, US new home sales, Eurozone investor confidence data and retail sales from Canada. In the week ahead attention could possibly turn to Powell's speech at the Jackson Hole economic symposium on Friday for clues on the interest rate outlook.
The EUR/USD pair dropped on Tuesday ending the session 0.47% lower at the lowest daily close since mid-June.
In June, the current account balance in the Eurozone surged to a surplus of €35.8 billion. Later today, the preliminary August PMI readings are expected.
Data released on Tuesday in the US showed a decline in Existing Home Sales from 4.16 million to 4.07 million in an annual rate, falling below the expected 4.15 million. On Wednesday, the US PMI data and New Home Sales report are also anticipated.
Gold prices rose on Tuesday posting 0.20% gains after a slight pullback for the dollar and bond yields as market participants await the Jackson Hole Symposium later in the week. The dollar was down 0.1% against its rivals, making gold less expensive for holders of other currencies.
Focus now shifts to European Central Bank President Christine Lagarde and U.S. Federal Reserve Chair Jerome Powell at Jackson Hole for a read on the interest rate outlook.
Oil prices settled lower for a second consecutive day, with WTI contact on iForex platform settling 0.57% lower below the level of $80 per barrels, amid worries over the economic stalling in China and the potential for more rate hikes by the Federal Reserve.
China, the world's second-largest economy, is considered crucial to shoring up oil demand over the rest of the year. The U.S. continued to draw crude stocks, which dropped by about 2.4 million barrels in the week ended Aug. 18 according to the API.
The US 30 and the US 500 ended slighly lower on Tuesday as market participantes stayed worried the Federal Reserve might keep interest rates higher for longer and as banks shares eased. The US 30 and US 500 ended the session 0.11% and 0.35% respectively while US Tech 100 posted minor gains ending the day 0.06% higher. Investors hope for clarity on the rate outlook when Fed Chair Jerome Powell speaks at a meeting of central bankers on Friday in Jackson Hole, Wyoming.
Among Earnings, companies including Nvidia Corporation,Snowflake Inc, Autodesk Inc, Kohl’s Corp, Peloton Interactive Inc , Foot Locker Inc, and Abercrombie & Fitch Company are expected to deliver quarterly results.
Ahead in Wednesday's trade, market participants will be closely monitoring building permits, new home sales, as well as manufacturing and services PMIs.
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