The US dollar rose on Monday after Federal Reserve Chair Jerome Powell adopted a more hawkish tone on the economy, leading traders to pare bets that the U.S. central bank will cut rates by 50 basis points again at its next meeting, despite concerns over Europe inflation. Powell said recent revisions to data on economic growth, savings rates, and personal income had removed some “downside risks” the Fed has been focused on.
He also said that he sees two more interest rate cuts, totaling 50 basis points, this year as a baseline “if the economy performs as expected,” and warned that it will likely take several years before housing services inflation cools to desirable levels.
Economic Data and Events Released Yesterday
- Japan’s jobless rate for August dropped to 2.5% from 2.7% in July, according to government data released on Tuesday. The seasonally adjusted unemployment rate was better than economists’ median forecast of 2.6%. Meanwhile, the jobs-to-applicants ratio for August declined to 1.23 from 1.24 in July, slightly below the forecasted 1.24.
- German inflation fell to its lowest level since February 2021 this month, preliminary data showed, helping European Central Bank doves build their case for another interest rate cut next month. German inflation eased slightly more than forecast to 1.8% in September, data from the federal statistics office showed.
- India’s fiscal deficit for April-August was 4.35 trillion rupees ($51.93 billion), or 27% of the estimate for the financial year, government data showed on Monday.
Commodity Update
Crude Oil prices were steady on Tuesday as the prospect of additional supply entering the market amid lacklustre global demand growth offset concerns that the escalating Middle East conflict could disrupt exports in the key producing region.
Brent crude futures LCOc1 for December delivery increased 13 cents, or 0.18%, to $71.83 a barrel as of. U.S. West Texas Intermediate crude futures CLc1 for November delivery gained 11 cents, or 0.16%, to $68.28 a barrel.
Oil markets have been under pressure from weaker-than-expected demand growth this year, particularly in China, the world’s biggest crude importer. Those demand concerns were reinforced on Monday after data showed the country’s manufacturing activity shrank for a fifth month in September.
Gold eased, taking a breather after a historic rally driven by U.S. monetary easing and heightened Middle East tensions, which put it on course for its best quarter since 2020.
Copper was the sweeping choice for the industrial metal with the best outlook for higher prices, attendees at a London Metal Exchange (LME) event. Copper got 46% of votes in an informal poll at the LME Seminar on which base metal is likely to have most upside, slightly less than last year at 53%.
Yesterday’s price action
MCX gold futures settled +1.01 to 75617. Silver settled -0.83% to 90641. Copper settled -0.54% to 851.65. Crude oil +0.90% at 5745. Natural gas -0.41% to 243.10.
Major Economic Data and Event scheduled today (US JOLTS Job opening, Europe Inflation)
China
No data and event scheduled, Bank Holiday
Australia
At 7.00am –
Retail Sales m/m. Data is foreseen at 0.4% from previous 0.0%.
Building Approvals m/m. Data is foreseen at -4.3% from previous 10.4%.
At 12.00pm- Commodity Prices y/y. Previous -5.2%.
Above data could have a mixed impact on the Dollar.
Eurozone
At 12.30pm- German Buba President Nagel Speaks
At 12.4pm- Spanish Manufacturing PMI. Data is foreseen at 50.2 from previous 50.5.
At 1.15pm- Italian Manufacturing PMI. Data is foreseen at 49 from previous 49.4
At 1.20pm- French Final Manufacturing PMI. Data is foreseen at 44 from previous 44.00
At 1.25pm- German Manufacturing PMI. Data is foreseen at 40.3 from previous 40.3
At1.30 pm- Final Manufacturing PMI. Data is foreseen at 44.8 from previous 44.8.
At 2.30pm-
Core CPI Flash Estimate y/y. Data is foreseen at 2.7% from previous 2.8%
CPI Flash Estimate y/y. Data is foreseen at 1.8% from previous 2.2%.
Above data could have a volatile impact on the Euro.
UK
At 2.00pm- Final Manufacturing PMI. Data is foreseen at 51.5 from previous 51.5
Above data could have a neutral impact on the pound.
Canada
At 2.00pm- Final Manufacturing PMI. Previous was at 49.5.
Above data could have a neutral impact on the dollar.
U.S.
At 7.15pm-Final Manufacturing PMI. Data is foreseen at 47 from previous 47
At 7.30pm –
ISM Manufacturing PMI. Data is foreseen at 7.64m from previous 7.67m.
JOLTS Job Openings. Data is foreseen at 7.64m from previous 7.67m.
ISM Manufacturing Prices. Data is foreseen at 699k from previous 739k.
At 8.30pm- FOMC Member Bostic Speaks
At 8.40pm- FOMC Member cook Speaks
Above data could have a volatile impact on the dollar.
Happy Trading!
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