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Gold drops below $1,700 on stronger dollar, rate-hike bets

“Don’t sit down and wait for the opportunities to come. Get up and make them.” Madam C.J

 

 

 HEADLINES

 

 

  • Sterling slides below $1.15 for first time since 2020
  • Gold drops below $1,700 on stronger dollar, rate-hike bets
  • Oil slides 3% as China lockdowns stoke demand fears
  • Stocks fall to start September as market reels on worries of rising rates
  • European markets close lower to start September; Stoxx 600 down 1.8%; Royal Mail slides
  • USD/CAD to advance nicely towards next resistance at 1.3220 – Scotiabank
  • USDJPY Near Term: Downside favored

 

 

Sterling slides below $1.15 for first time since 2020

 

 

Sterling skidded against the dollar on Thursday to its lowest level since March 2020 as storm clouds gathered over the British economy and investors seek safety in the U.S currency.

Adding to August losses that amounted to its worst month since late 2016, the pound briefly slid as low as $1.1499 , a new low since March 2020 when COVID-19 hit markets.

The British currency was last hovering just above that level at $1.1534, down 0.7% on the day.

The pound lost 4.6% against the dollar last month in its worst performance since October 2016, and has fallen by nearly 15% this year, fuelled by concerns about slowing growth in the British economy as inflation soars into double digits

Its closing price on Wednesday was its weakest monthly close since 1985, when it hit an all-time low of around $1.05 .

 

 

COMMODITIES

 

 

Gold drops below $1,700 on stronger dollar, rate-hike bets

 

 

Gold prices fell below the key $1,700 level on Thursday for the first time since July, as a rising dollar and expectations for aggressive interest rate hikes eroded its appeal.

Spot gold fell 0.8% to $1,696.81 per ounce by 12:08 p.m. ET (1608 GMT), having dropped to its lowest since July 21 earlier in the session.

U.S. gold futures dipped 1.2% to $1,706.10. Gold is considered a safe store of value during times of economic uncertainty, but a higher rate environment tends to take the shine off the asset as it does not pay any interest.

 

 

ENERGY

 

 

Oil slides 3% as China lockdowns stoke demand fears

 

 

Oil prices tumbled 3% on Thursday, as new COVID-19 lockdown measures in China added to worries that high inflation and interest rate hikes are denting fuel demand.

Brent crude futures fell $2.97 to $92.67 a barrel, a 3.1% loss, by 11:48AM EST (16:48 GMT). U.S. West Texas Intermediate (WTI) crude futures fell $2.54, or 2.8%, to $87.01 per barrel.

 

 

 

STOCKS

 

 

Stocks fall to start September as market reels on worries of rising rates

 

 

U.S. equities fell Thursday, the first day of September, as traders continued to fret over the potential for higher Federal Reserve rates.

The Dow Jones Industrial Average fell 110 points, or 0.4%. The S&P 500 and Nasdaq Composite declined 0.9% and 1.9%, respectively.

The major averages are on track to finish the week lower. The Dow is set to post a 2.7% decline, while the S&P and Nasdaq are on pace to end down about 3.4% and 4.5%, respectively.

The moves came as the 2-year U.S. Treasury yield rose to 3.516%, the highest level since November 2007, at one point Thursday. That weighed on rate sensitive growth stocks, making their future profits less attractive.

 

 

European markets close lower to start September; Stoxx 600 down 1.8%; Royal Mail slides

 

 

The pan-European Stoxx 600 closed 1.8% lower Thursday, with all sectors ending the day in the red. Travel and leisure stocks led losses, falling 3.9%, followed by basic resources, down 3.8%.

Market jitters have been prevalent since Friday after hawkish remarks from Federal Reserve Chair Jerome Powell. On Tuesday, New York Fed President John Williams called for a “somewhat restrictive policy to slow demand.”

U.S. stocks were lower in mid-morning trade, extending losses for the fourth day and putting the summer market comeback in doubt as investors weighed the Federal Reserve’s inflation-fighting efforts.

 

 

ANALYSIS

 

 

USD/CAD to advance nicely towards next resistance at 1.3220 – Scotiabank 

 

 

“There is no letup in the USD’s broader drive higher on the short run charts and broader (daily, weekly) trend strength signals are aligned with intraday oscillators which tilt risks clearly towards more USD gains and limited losses in the short run at least.”

Support is 1.3140/50 intraday. Key support is 1.3075.”

“Resistance is 1.3220 and 1.3330.”

 

CHART

 

 

USDJPY Near Term: Downside favored

 

 

Technical View: Long position above 139.7. Target 139. Conversely, break below 139.7, to open 140.

Comments: The pair remains under pressure. Further weakness favored.

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar


Footnotes
https://www.reuters.com/markets/europe/sterling-slides-further-against-soaring-dollar-2022-09-01/
https://www.reuters.com/article/global-precious/precious-gold-drops-below-1700-on-stronger-dollar-rate-hike-bets-idUSL4N30838W
https://www.reuters.com/business/energy/oil-falls-greater-supply-lower-china-demand-2022-09-01/
https://www.cnbc.com/2022/08/31/stock-market-futures-open-to-close-news.html
https://www.cnbc.com/2022/09/01/european-markets-open-to-close-data-news-earnings.html
https://www.fxstreet.com/news/usd-cad-to-advance-nicely-towards-next-resistance-at-13220-scotiabank-202209011435
 

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