Bullions dropped nearly one month low yesterday. Prices witnessed a steep fall as worsening market sentiment and the prospect of more Federal Reserve rate hikes pushed investors into the dollar. MCX Gold Future settled at 59248, down 0.29%. Silver Future settled at 70216, down 1.48%.
Copper prices extended their fall as disappointed China trade balance data from top exporter China pointed to weakening demand for the red metal. MCX August Future settled at 729.35, down by 1.10%.
Crude oil witnessed a smart recovery from the day’s low of 6629 and settled at 6840.00. Price dropped significantly after weak trade data from China pointed to a sluggish post-COVID rebound for the world’s largest oil importer.
The dollar had a volatile trade as uncertainty over the Federal Reserve and anticipation of key inflation readings due on Thursday. Fed Governor Michele Bowman said on Monday that additional interest rate hikes will likely be needed to lower inflation to the U.S. central bank’s 2% target.
Economic data released yesterday
China (CPI) inflation fell 0.3% in the 12 months to July, slightly better than expectations for a drop of 0.4%, data from the National Bureau of Statistics showed on Wednesday. This came after a flat reading for June, and marks the first annual contraction in CPI since September 2021.
CPI Inflation rose 0.2% from the prior month, slightly beating out expectations for growth of 0.1%.
PPI inflation shrank 4.4% in July, more than expectations for a drop of 4.1%. While the reading did show some improvement from the 5.4% decline in June, it still remained close to its worst levels since the yuan crisis of 2016.
US wholesale inventories dropped 0.5% instead of falling 0.3% as previously reported last month. Stocks at wholesalers declined 0.4% in May.
China imports and exports fell much faster than expected in July, with imports down 12.4% year-on-year, missing a forecast fall of 5%, while exports contracted 14.5%, steeper than an expected 12.5%.
Economic data and events to watch today
Japan
At 11.30 am – Prelim Machine Tool Orders y/y. Previous was at -21.1%.
Above data could have a negative impact on Yen.
Eurozone
Tentative – German 10-y Bond Auction.
U.K.
Tentative – 10-y Bond Auction
Canada
At 6.00 pm – Building Permits m/m. The forecast is -2.1% previous was at 10.5%.
Above data could have a negative impact on the Canadian dollar.
U.S
At 8.00 pm – Crude Oil Inventories. Data is foreseen at 2.1M previous was at -17M.
At 10.31 PM – 10-y Bond Auction
Above data could have a volatile impact on the dollar.