GKFX
RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. See our full Risk Disclosure and Terms of Business for further details.

Search LOGIN

Wall Street resumes busy trading season in the red

“The goal isn’t more money. The goal is living life on your terms.” – Will Rogers

 

 

 HEADLINES

 

 

  • Dollar gains, euro slips further from parity
  • Gold slips as dollar resumes rally, bond yields rise
  • Oil sinks as demand fears take steam out of OPEC-led rally
  • Wall Street resumes busy trading season in the red
  • U.S. Treasury yields rise sharply following strong economic data
  • EUR/JPY: Negative growth outlook favours downside – ING
  • EURJPY Near Term: Upside favored

 

 

Dollar gains, euro slips further from parity

 

 

The dollar marched higher on Tuesday after a report on the U.S. services industry in August reinforced the view that the United States was not in recession, while the euro and rate-sensitive Japanese yen tumbled further against the greenback.

The dollar index rose 0.547% after the Institute for Supply Management said its non-manufacturing PMI edged up to a reading of 56.9 from 56.7 in July, the second straight monthly increase after three months of declines.

The surprise reading - economists in a Reuters poll had forecast it would slip to 54.9 - followed the ISM's manufacturing survey last week that showed U.S. factory activity grew steadily in August in contrast to other major economies.

 

 

COMMODITIES

 

 

Gold slips as dollar resumes rally, bond yields rise

 

 

Gold prices on Tuesday slipped from a one-week high hit earlier in the session as the dollar and Treasury yields climbed amid expectations for aggressive monetary policy tightening by major central banks.

Spot gold fell 0.6% to $1,699.70 per ounce by 3:02 p.m. ET (1902 GMT), after hitting its highest since Aug. 30 at $1,726.49 in the Asia trading session.

U.S. gold futures settled down 0.6% at $1,712.9.

Focus this week will be on the European Central Bank meeting on Thursday, where it is expected to deliver a 75-basis-point interest rate hike.

 

 

ENERGY

 

 

Oil sinks as demand fears take steam out of OPEC-led rally

 

 

Oil prices fell on Tuesday as concern returned about the prospect of more interest rate hikes and COVID-19 lockdowns weakening fuel demand, reversing a two-day rally on OPEC+'s first output target cut since 2020.

Brent crude settled at $92.83 a barrel, losing $2.91, or 3%. U.S. West Texas Intermediate (WTI) fell from Monday's trading to settle at $86.88 a barrel, up 1 cent from Friday's close.

 

STOCKS

 

 

Wall Street resumes busy trading season in the red

 

 

Wall Street's main indexes closed lower on Tuesday, the first session after the U.S. Labor Day holiday and summer vacations, as traders assessed fresh economic data in volatile trading.

A survey from the Institute for Supply Management (ISM) showed the U.S. services industry picked up in August for the second straight month amid stronger order growth and employment, while supply bottlenecks and price pressures eased.

However, numbers from S&P Global showed the services sector Purchasing Managers' Index fell short of flash estimates for August.

A stronger-than-expected reading on the U.S. services sector fueled expectations that the Federal Reserve will keep raising interest rates to tame inflation.

 

 

U.S. Treasury yields rise sharply following strong economic data

 

 

U.S. Treasury yields surged higher on Tuesday as investors responded to strong U.S. economic data.

The yield on the benchmark 10-year Treasury note traded higher by more than 14 basis points at 3.328% at around 10 a.m. ET, while the yield on the 30-year Treasury bond gained nearly 13 basis points to 3.472%.

The yield on the 2-year Treasury note jumped 9 basis points to trade at 3.493%. The short-term note climbed to 3.55% last week, notching its highest level since 2007. Yields move inversely to prices, and a basis point is equal to 0.01%.

 

 

ANALYSIS

 

 

EUR/JPY: Negative growth outlook favours downside – ING 

 

 

“EUR/JPY typically tends to be positively correlated with the global growth cycle – and clearly the cycle is not looking good.”

“Fiscal efforts by governments to offset the energy crisis at both the consumer and business level will struggle to prevent economies entering recession. The recent hawkish turn from the ECB has yet to provide any lasting support to the euro.”

“Our EZ macro team looks for just a 75 bps ECB tightening cycle this year – compared to 166 bps of tightening expected by the market. If correct, that should leave the euro vulnerable this autumn.”

 

 

CHART

 

 

EURJPY Near Term: Upside favored

 

 

Technical View: Long position above 140.45. Target 141.16. Conversely, break below 140.45, to open 139.84.

Comments: The pair remains supported. Further advance favored.

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

GE ---

Source: FX Street Economic Calendar


Footnotes

https://www.reuters.com/markets/europe/dollar-pauses-broad-rally-bulls-still-solidly-positioned-2022-09-06/
https://www.reuters.com/markets/europe/gold-gains-dollar-rally-pause-slowdown-fears-2022-09-06/
https://www.reuters.com/business/energy/oil-dips-symbolic-opec-output-cut-2022-09-06/
https://www.reuters.com/markets/europe/futures-climb-after-recent-declines-wall-street-2022-09-06/
https://www.cnbc.com/2022/09/06/us-bonds-treasury-yields-in-focus-amid-economic-data-auctions.html
https://www.fxstreet.com/news/eur-jpy-negative-growth-outlook-favours-downside-ing-202209061215