Today’s economic news offers some compelling insights.
The Dollar lost its edge today as a surge in US weekly jobless claims sent shockwaves through the markets, signaling a weaker labor market and sparking whispers of a dovish Fed stance. The Dollar Index, after reaching a one-week high, retreated by -0.40%, settling at 101.23. The Euro seized the moment, gaining momentum as the ECB cut rates but held back from promising more, putting additional pressure on the greenback.
However, it’s not all doom for the Dollar. The US Aug PPI report, in line with expectations, put a brake on speculation of a massive 50 bp rate cut at the upcoming FOMC meeting.
Economic Data and Events Released Yesterday
- The ECB lowered its deposit rate to 3.5%, as widely expected. The refinancing rate, however, was cut by a much bigger 60 bps to 3.65% in a long-flagged technical adjustment.
- US Wholesale goods prices were unchanged in August after rising 0.6% in July. Energy prices dropped 0.9%. Food prices gained 0.1%. Core goods prices climbed 0.2% after a similar advance in July. The narrower measure of PPI, which strips out food, energy and trade, rose 0.3%, matching July’s gain. The so-called core PPI increased 3.3% year-on-year after climbing 3.2% in July.
- Based on the CPI and PPI data, economists’ estimates for the PCE price index, excluding the volatile food and energy components, ranged from an increase of 0.14% to 0.18% in August. Core PCE inflation rose 0.2% in July.
- Core inflation is forecast to have advanced 2.7% year-on-year in August after rising 2.6% in July. The anticipated rise in annual core inflation would be the result of last year’s low readings dropping out of the calculation.
- Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 230,000 for the week ended Sept. 7. Economists polled by Reuters had forecast 230,000 claims for the latest week. Last week’s data included the Labor Day holiday.
Commodity Update
Gold: Gold prices rose more than 1% to hit a record high on Thursday, helped by expectations of an interest rate cut by the Federal Reserve next week after U.S. data signalled a slowing of the economy.
Crude Oil: Oil climbed as Hurricane Francine hit U.S. Gulf of Mexico production, Brent +2.2%, WTI +2.75%. U.S. copper +1.6% on signs of stronger China demand.
Copper: Copper prices jumped to their highest level in nearly two weeks on Thursday on signs of firmer demand in top metals consumer China and the prospect of interest rate cuts. The market shrugged off news on Wednesday that Russian President Vladimir Putin had said Moscow should consider limiting exports of nickel. Russia is a major nickel supplier to China and Europe.
Yesterday’s price action
MCX gold futures settled +1.25% to 72824. Silver settled +3.13% to 87095. Copper settled +0.81% to 798.65. Crude oil +2.09% at 5809. Natural gas +4.43% to 200.3.
Major Economic News, Data and Event scheduled today
Japan
At 10.00am –Revised Industrial Production m/m. Data is foreseen at 2.8% from previous 2.8%.
Above data could have a positive impact on the Yen.
Eurozone
At 12.15pm—French Final CPI m/m. Data is foreseen at 0.6% from previous 0.6%.
At 2.30pm- Industrial Production m/m. Data is foreseen at -0.6% from previous -0.1%.
All day – Eurogroup Meetings
Above data could have a volatile impact on the Euro.
CANADA
At 6.00 pm-
Capacity Utilization Rate. Data is foreseen at 78.8% from previous 78.5%.
Wholesale Sales m/m. Data is foreseen at -1.1% from previous -0.6%.
Above mentioned economic news and data could have a mixed impact on the dollar.
US
At 6.00pm – Import Prices m/m. Data is foreseen at -0.2% from previous 0.1%.
At 7.30pm-
Prelim UoM Consumer Sentiment. Data is foreseen at 0.1% from the previous 0.1%.
Prelim UoM Inflation Expectations. Previous was at 2.8%.
Above mentioned economic news and data could have a volatile impact on the dollar
Happy Trading!
Commodity Samachar Securities
We Decode the Language of the Markets
Also Read: Expiry Day Explosion: Nifty Powers to New Heights!
Recommended Read: GDP : Is it an important aspect that you should focus on?
Want Help On Your Trades ?
Chat with RM