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23/08/2024 - 07:43 UTCThe US Dollar (USD), as reflected by the US Dollar Index (USDX), climbed above the 101.00 level during Thursday's trading session and added 0.33% daily gains. This increase comes as markets keenly await Federal Reserve Chair Jerome Powell's speech on Friday and digest the latest Jobless Claims and S&P PMI data.
On the economic data front, initial claims for unemployment insurance increased to 232,000 for the week ending August 17, slightly above the consensus estimate of 230,000 and up from the previous week's 228,000, according to the US Department of Labor. Meanwhile, the August flash estimate for the US S&P Global Composite PMI dipped slightly to 54.1 from 54.3 in July, but still beat market expectations of 53.5, indicating robust expansion in the private sector. In contrast, the S&P Global Manufacturing PMI fell to 48, showing continued contraction, while the Services PMI edged up to 55.2.
Investors are closely monitoring Powell’s upcoming speech at the Jackson Hole Symposium for any signals regarding potential rate cuts in September. Currently, markets are pricing in a total of 100 basis points of easing by the end of the year, but these expectations may shift following Powell's remarks.
Japan's core inflation increased for the third consecutive month in July, according to data released on Friday. However, a slowdown in demand-driven price growth could complicate the Bank of Japan's decisions regarding potential interest rate hikes in the coming months.
All three major U.S. stock indexes declined on Thursday, led by losses in technology stocks, as rising Treasury yields reflected easing recession fears.
In Corporate news Snowflake raised its full-year product revenue forecast, but its shares fell 14.7% due to an unchanged margin outlook. Conversely, Zoom Video Communications saw its shares surge 13.0% after raising its annual revenue forecast.
On the energy front, Oil prices closed higher on Thursday, boosted by an unexpected drop in U.S. inventories, but were still set for significant weekly losses due to weak U.S. labor data heightening global demand concerns.
The EUR/USD pair ended the session on Thursday down by over 0.30%, as rising US Treasury yields have strengthened the US Dollar. This comes despite indications that Federal Reserve officials are supportive of a potential rate cut at the upcoming September meeting.
The latest S&P Global PMIs for August revealed a mixed economic picture, with the Services PMI surpassing expectations while the Manufacturing PMI showed deeper contraction, suggesting a slowing economic momentum. In the Eurozone, Flash PMIs delivered mixed results too.
In the US, all eyes will be on Fed Chair Jerome Powell’s speech and new housing market data, which could provide further insights into the Fed’s policy direction.
Gold prices pulled back on Thursday after a five-day rally ending the session 1% lower. The decline in gold prices was driven by a rise in US Treasury bond yields, which bolstered the US Dollar and put downward pressure on the precious metal. The tick-up in yields followed the release of economic data from the United States, which showed mixed results.
Amid this backdrop, investors are looking ahead to Fed Chair Jerome Powell's upcoming speech at the Jackson Hole symposium, where he is expected to outline the Federal Reserve’s monetary policy direction for the latter half of 2024.
Oil prices rose by more than 1% on Thursday, reversing four consecutive days of declines, as expectations grew for a US interest rate cut in the coming weeks.
Higher interest rates typically raise borrowing costs, potentially slowing economic activity and reducing demand for oil.
In the Middle East, geopolitical tensions persist as Iran-aligned Houthi militants continue attacks on international shipping, adding to market uncertainty.
Investors are also closely monitoring OPEC+ developments, as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, may reconsider their plan to gradually ease output cuts in October.
All three major U.S. stock indexes fell on Thursday, pressured by losses in technology stocks, as rising Treasury yields eased fears of a recession. Meanwhile, global central bank officials gathered at the Jackson Hole Economic Symposium, adding to market uncertainty.
The tech-heavy US Tech 100 was hit hardest, dragged down by the so-called "Magnificent Seven" megacap growth stocks.
Recent economic data has fueled expectations for rate cuts. On Thursday, news of rising U.S. jobless claims, following Wednesday’s significant downward revision of payroll figures, suggested the labor market is gradually weakening.
This has eased fears of a recession and strengthened the case for a 25 basis point rate cut at the Fed’s September meeting.
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