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PRECIOUS-Gold gains on dollar pullback after weak U.S. data

“Remember, today is the tomorrow you worried about yesterday.” – Dale Carnegie 

 

 

HEADLINES

 

 

  • Dollar slides on contraction in private sector activity
  • PRECIOUS-Gold gains on dollar pullback after weak U.S. data
  • Oil jumps $3/bbl on possible OPEC+ tightening as Iran deal looms
  • Nasdaq ticks up on hopes of less aggressive rate hikes after weak PMI data
  • 10-year Treasury yield holds above 3% as investors await economic data
  • EUR/USD to see limited support until 0.9575/70 on a dip under 0.99 – Scotiabank
  • GBPUSD Near Term: Upside favored

 

 

Dollar slides on contraction in private sector activity

 

The dollar pulled back from a fresh two-decade high against the euro on Tuesday after a report showed U.S. private sector activity contracted for a second-straight month in August, raising prospects the Federal Reserve will ease its rate hiking cycle.

The S&P Global flash composite purchasing managers index (PMI) for August dropped to 45 this month, the lowest since February 2021, as demand for services and manufacturing weakened in the face of inflation and tighter financial conditions. A reading below 50 indicates a contraction in activity.

The drop in demand was exactly what the Fed has been trying to achieve with its stiffest run of interest rate increases since the 1980s. The Fed has hiked rates from near zero in March to their current range of 2.25% to 2.50%, with more expected in the months ahead, as it tries to tame inflation, which is running near a 40-year high.

 

 

COMMODITIES

 

 

PRECIOUS-Gold gains on dollar pullback after weak U.S. data

 

Gold rose on Tuesday, snapping six straight sessions of losses, helped by a pullback in the dollar and lower Treasury yields following weak U.S. business activity data.

Spot gold rose 0.9% at $1,750.59 per ounce by 10:33 ET (1433 GMT). Prices slipped in the last six sessions and hit $1,727.01 on Monday, the lowest since July 27.

U.S. gold futures rose 0.9% to $1,764.20. "Dollar and yields have dipped after the weak flash PMI data, helping gold," said Edward Moya, senior analyst with OANDA.

 

 

ENERGY

 

 

Oil jumps $3/bbl on possible OPEC+ tightening as Iran deal looms

 

Oil prices jumped about $3 a barrel on Tuesday after Saudi Arabia floated the idea of OPEC+ output cuts to support prices in the case of returning Iranian crude and with the prospect of a drop in U.S. inventories.

The Saudi energy minister said OPEC+ had the means to deal with challenges including cutting production, state news agency SPA said on Monday, citing comments Abdulaziz bin Salman made to Bloomberg.

 

 

STOCKS

 

 

Nasdaq ticks up on hopes of less aggressive rate hikes after weak PMI data

 

The tech-heavy Nasdaq edged higher in choppy trading on Tuesday supported by megacap growth stocks on cautious hopes that the Federal Reserve will not be as aggressive in raising rates following weak U.S. business activity data.

Private-sector business activity in the United States contracted for a second straight month in August, with particular softness in the services sector as demand weakened in the face of inflation and tighter financial conditions.

The S&P Global flash composite purchasing managers index (PMI) for August dropped to 45 this month, the lowest since February 2021, from a final reading of 47.7 in July. A reading below 50 indicates a contraction in activity.

 

 

10-year Treasury yield holds above 3% as investors await economic data

 

The yield on the benchmark 10-year Treasury note held above 3% Tuesday as investors monitored a fresh batch of economic data and looked ahead to the Jackson Hole economic symposium later in the week.

The 10-year Treasury yield rose 1 basis point to 3.046% at about 1:39 p.m. ET, remaining above the 3% level after surpassing it for the first time in a month in the previous session.

The yield on the 30-year Treasury bond gained nearly 1 basis point on the day to 3.248%, while the yield on the short-term 2-year Treasury note was 3 basis points lower, trading at about 3.308%. Yields move inversely to prices, and a basis point is equal to 0.01%.

 

 

ANALYSIS

 

 

EUR/USD to see limited support until 0.9575/70 on a dip under 0.99 – Scotiabank 

 

“Short-term price action does reflect some positives for the EUR – bullish reversals on the one and six-hour charts – but the lack of follow through off the intraday low at 0.99 suggests only weak demand for the EUR here, with the figure area still drawing attention.”

“We spot intraday resistance at 0.9950.” 

“Support below the figure is really limited to 50s and 00s until 0.9570/75.”

 

 

CHART

 

 

GBPUSD Near Term: Upside favored

 

Technical View: Long position above 1.1745. Target 1.189. Conversely, break below 1.1746, to open 1.172.

Comments: The pair breaks above the resistance.

 

 

 

 

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

 

 

 

 

Source: FX Street Economic Calendar

 


Footnotes
https://www.reuters.com/markets/us/dollar-steady-euro-wallows-two-decade-low-energy-growth-woes-2022-08-23/
https://www.reuters.com/article/global-precious/precious-gold-rises-as-dollar-treasury-yields-fall-after-poor-u-s-data-idUSL4N2ZZ2VR
https://www.reuters.com/article/global-oil/update-7-oil-jumps-3-bbl-on-possible-opec-tightening-as-iran-deal-looms-idUSL1N2ZZ02C
https://www.reuters.com/markets/europe/futures-edge-up-ahead-business-activity-data-2022-08-23/
https://www.cnbc.com/2022/08/23/us-bonds-10-year-treasury-yield-in-focus-amid-economic-data.html
https://www.fxstreet.com/news/eur-usd-to-see-limited-support-until-09575-70-on-a-dip-under-099-scotiabank-202208231335