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During the Asian session, a key report to watch will be the Australian employment report. Additionally, wholesale inflation data will be released in New Zealand and Machinery Orders in Japan. Later in the day, the US will release the weekly Jobless Claims and the Philly Fed report.

Here is what you need to know on Thursday, August 17:

The US Dollar continues to strengthen amidst risk aversion and higher Treasury yields. The DXY index reached its highest level since June, nearing 103.50, and extended its positive streak to five days. Despite this rally, the momentum of the Greenback remains firm.

The FOMC minutes revealed that some members remain concerned about inflation risks. Two members expressed a preference for keeping rates unchanged at the July meeting. Overall, the minutes indicated that the possibility of further rate hikes is still being considered if there is a rebound in inflation.

Later in the trading session, Wall Street stocks decisively turned downward. The Dow Jones lost 0.52%, marking its lowest close in a month. In the bond market, traders interpreted a hawkish message. The 10-year Treasury yield settled at 4.26%, the highest level since 2007, while the 2-year yield approached 5%.

The Pound outperformed, buoyed by positive UK inflation and retail sales data. GBP/USD finished off its highs but managed to hold above 1.2700. However, the strength of the US Dollar is limiting the upside potential for the pair.

EUR/USD broke below the 1.0900 level, increasing bearish pressure and closing at its lowest level in a month. Despite positive data from the Eurozone, it did not decisively impact the Euro. Euro area trade balance data is scheduled to be released on Thursday.

USD/JPY has risen for eight consecutive days, climbing above 146.00. The depreciation of the Japanese Yen has drawn market participants’ attention to Japanese officials and the possibility of intervention.

USD/CAD broke above 1.3500, rising towards 1.3550, reaching its highest level since early June. The pair is overbought but is seeking a new equilibrium level. The decline in crude oil prices (WTI lost 2.15%) has added weight to the Loonie.

AUD/USD extended its decline towards the 0.6400 area. The weakness is likely to persist while it remains below 0.6500. Australian labor data is set to be released on Thursday, with an expected increase of 15,000 in employment.

Australian Jobs Report Preview: Pattern points to disappointing data, downing the Aussie

The Reserve Bank of New Zealand (RBNZ) kept interest rates unchanged at 5.5% as expected, which was perceived as a “hawkish hold” and briefly boosted NZD/USD. However, after the pair reached 0.5993, it resumed its decline and broke below the 0.5950 support area. It has lost ground for the seventh consecutive day.

Analysts at TD Securities on Antipodean currencies and NZD strategy:

The Antipodean currencies are having a horrid month since mid-July and there seems to be little reprieve given the shift in market sentiment. We note that the Antipodean currencies are trading more closely to the China growth narrative, risk-off sentiment and drop in equities rather than the domestic story and recent price action reflects that. We don’t expect any of these factors to show a reversal soon, which puts doubt on any significant rebound for NZD in the near-term, and we are biased to selling the NZD on rallies instead of chasing it lower as NZD is in oversold territory based on the RSI daily.

Metals are facing downward pressure again. Gold is currently trading below $1,900, at five-month lows. Silver has also experienced some losses, but it is still trading above the August lows, hovering around $22.40.
 


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