A lack of major data releases kept traders focused on overall risk sentiment and positioning ahead of this week’s anticipated data releases.
Commodities like gold and oil weakened further, while the U.S. dollar gained ground against most of its counterparts.
Check out which headlines made waves among the major assets!
Headlines:
- Australia’s inflation cooled to multi-month lows but remained sticky high in July
- Australia quarterly construction work for Q2 2024: 0.1% (0.8% expected, -2.0% previous)
- BOJ Deputy Gov. Ryozo Himino signaled readiness for further rate hikes but hinted that they may not be imminent
- Swiss UBS economic expectations fell from 9.4 to -3.4 in August; Analysts see a 68% probability of an SNB rate cut by September
- EIA: U.S. crude oil inventories fell by 0.8M barrels in the week ending August 23, smaller than the anticipated 3M-barrel draw
- Bitcoin failed to hold above $60,000
- ANZ: New Zealand business confidence jumped from 27.1 to 50.6 in August, the highest in a decade, even before RBNZ’s rate cut
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Like in previous sessions, the lack of market-moving news kept most major assets stuck in their ranges early on Wednesday, except for crude oil and gold. Oil continued its drop from the previous U.S. session, while spot gold reversed after testing its weekly highs near $2,525.
As the European session began, selling pressure on commodities picked up. This could be due to a slight recovery in the U.S. dollar ahead of key data releases or end-of-month profit-taking. Improved risk sentiment also played a role, as easing Middle East tensions and concerns over Libya’s oil exports weighed on WTI crude.
This cautious tone extended to U.S. stock indices, which slipped ahead of NVIDIA’s earnings report and key economic data. The S&P 500, Nasdaq, and Dow all ended the day lower, while 10-year U.S. Treasury yields, bitcoin, spot gold, and oil prices remained range-bound as the session wrapped up.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
Dollar traders started the day on strong footing, pushing USD higher after seeing a downtrend on Tuesday. The Australian dollar got a few pips in, thanks to Australia’s monthly inflation coming in cooler but still sticky high in July (hey, it rhymes!).
BOJ Deputy Governor Himino stirred up demand for the yen and the dollar in late Asian trading by reiterating the central bank’s willingness to raise interest rates further if growth and inflation align with their forecasts. The USD dropped, and the JPY jumped on the news, but those moves partially reversed in early European trading.
In the U.S., the lack of data left the dollar vulnerable to month-end flows and positioning ahead of NVIDIA’s post-market earnings and upcoming U.S. data. The USD softened at the start of U.S. trading and finished the day below its intraday highs.
Upcoming Potential Catalysts on the Economic Calendar:
- Japan consumer confidence at 5:00 am GMT
- Germany preliminary CPI out during the European session
- Spain flash CPI at 7:00 am GMT
- Canada current account balance at 12:30 pm GMT
- U.S. preliminary GDP at 12:30 pm GMT
- U.S. initial jobless claims at 12:30 pm GMT
- U.S. goods trade balance at 12:30 pm GMT
- U.S. pending home sales at 2:00 pm GMT
- SNB Chairman Jordan to give a speech at 4:00 pm GMT
- FOMC member Raphael Bostic to give a speech at 7:30 pm GMT
- New Zealand building consents at 10:45 pm GMT
- Tokyo core CPI at 11:30 pm GMT
- Japan unemployment rate at 11:30 pm GMT
- Japan preliminary industrial production and retail sales at 11:50 pm GMT
- Australia retail sales at 1:30 am GMT (Aug 30)
The euro could see increased volatility during the European session as Germany and Spain print inflation reports.
In the U.S., traders will have another chance to talk about the U.S. economy’s prospects at the parade of lower-tier data releases scheduled today.
Keep an eye out for headlines and market themes that may affect overall USD demand and risk sentiment in the markets!
