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Gold jumps as dollar slips; focus shifts to U.S. inflation data

 

 

“The value of an idea lies in the using of it.” — Thomas Edison

 

 

 HEADLINES

  • Dollar falls ahead of U.S. inflation data; euro jumps
  • Gold jumps as dollar slips; focus shifts to U.S. inflation data
  • Oil prices amid supply concerns heading into winter
  • Dow climbs more than 200 points as market’s relief rally pushes higher
  • Treasury yields edge lower as U.S. consumer inflation expectations decline
  • GBP/USD: Break through mid/upper 1.17s should add to positive momentum – Scotiabank
  • USDJPY Near Term: Downside favored

 

 

Dollar falls ahead of U.S. inflation data; euro jumps

 

The U.S. dollar fell to its lowest level in about two weeks against a basket of currencies on Monday following recent strong gains, as investors grew nervous ahead of U.S. inflation data and as central banks outside of the United States appeared increasingly hawkish.

The euro climbed to more than a three-week high against the dollar, with European Central Bank officials arguing for further aggressive monetary tightening.

Strategists said the release on Tuesday of the monthly U.S. consumer price index report will be closely watched for clues on how aggressive the Federal Reserve may need to be in hiking interest rates next week to fight high inflation.

 

 

COMMODITIES

 

Gold jumps as dollar slips; focus shifts to U.S. inflation data

Gold jumped 1% and silver rallied over 6% on Monday bolstered by a weaker dollar, while investors awaited key inflation data for cues on the pace of interest rate hikes by the U.S. central bank.

Spot gold last rose 0.7% to $1,740.70 per ounce. U.S. gold futures also gained 0.71% to $1,740.80

The dollar index retreated, making gold more attractive for overseas buyers. Investors braced for Tuesday’s U.S. Consumer Price Index reading that is likely to show August prices rose at an 8.1% pace over the year, versus an 8.5% print for July.

Gold is traditionally considered an inflation hedge, but rate hikes translate into a higher opportunity cost for holding bullion, which pays no interest.

 

 

ENERGY

 

Oil prices amid supply concerns heading into winter

 

Oil prices rose on Monday, shaking off weaker demand expectations as supply concerns mount heading into the winter.

Brent crude futures rose $1.51, or 1.6%, to $94.35 a barrel by 12:42 p.m. EDT (1642 GMT). U.S. West Texas Intermediate crude was up $1.28, or 1.5%, at $88.07.

U.S. emergency oil stocks fell 8.4 million barrels to 434.1 million barrels in the week ended Sept. 9, its lowest since October 1984, according to data released Monday by the U.S. Department of Energy (DOE).

 

 

STOCKS

 

Dow climbs more than 200 points as market’s relief rally pushes higher

 

Stocks rose on Monday as a weaker dollar and growing confidence that inflation has peaked helped Wall Street’s relief rally continue.

The Dow Jones Industrial Average gained 220 points, or 0.7%. The S&P 500 rose 1%, and the Nasdaq Composite added 1.2%.

Energy was the top sector, but the rally was broad, with Bristol-Myers Squibb gaining nearly 6% and tech stalwart Apple adding 3.4%.

The moves extended a rebound for U.S. stocks, as all three major averages snapped a three-week losing streak on Friday.

 

Treasury yields edge lower as U.S. consumer inflation expectations decline

 

Bond yields were down slightly on Monday as the U.S. dollar weakened and inflation expectations declined.

The yield on the benchmark 10-year Treasury note was 4 basis points lower, trading at 3.28% at around 11 a.m. ET. The yield on the 30-year Treasury bond was down about 2 basis points at 3.438%.

The yield on the 2-year Treasury traded 5 basis points lower at 3.521%. Yields move inversely to prices, and a basis point is equal to 0.01%.

 

 

ANALYSIS

 

GBP/USD: Break through mid/upper 1.17s should add to positive momentum – Scotiabank 

 

“Cable closed positively last week (weekly bull ‘hammer’) and additional progress through the mid/upper 1.17s should add to positive momentum in the short/medium term.”

“Support is 1.1575/00.”

 

 

CHART

 

USDJPY Near Term: Downside favored

 

Technical View: Short position below 143.45. Target 142.1. Conversely, break above 143.45, to open 144.4.

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

 

---- CHART IMAGE --- 

 

Source: Trading Central 

 

 

CALENDAR

 

*Times in GMT

 

---- CALENDAR IMAGE ---

 

Source: FX Street Economic Calendar

 

 

SOURCES

 

https://www.reuters.com/markets/europe/euro-jumps-amid-hawkish-ecb-signals-dollar-heavy-before-us-cpi-2022-09-12/
https://www.cnbc.com/2022/09/12/gold-markets-inflation-interest-rate-hikes-federal-reserve.html
https://www.reuters.com/business/energy/oil-prices-slide-china-covid-curbs-possible-rate-hikes-weigh-demand-outlook-2022-09-12/
https://www.cnbc.com/2022/09/11/stock-futures-rise-as-wall-street-looks-ahead-to-key-inflation-data-.html
https://www.cnbc.com/2022/09/12/treasury-yields-edge-lower-ahead-of-us-consumer-expectations-report.html
https://www.fxstreet.com/news/gbp-usd-break-through-mid-upper-117s-should-add-to-positive-momentum-scotiabank-202209121435