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The greenback index (DXY00) is down by -0.04% as we speak. The greenback gave up an early advance as we speak and turned decrease on weaker-than-expected US financial information, including July new home gross sales and Aug shopper confidence. Also, WTI crude oil plunged -3% to a 1-week low as we speak, decreasing inflation expectations and a dovish issue for Fed coverage. In addition, safe-haven demand for the greenback was lowered as we speak after the New York Times reported the US State Department is making ready to ship US diplomats back to embassies in the Middle East that were evacuated before and during the warfare with Iran, suggesting that the Trump administration does not anticipate a return to all-out hostilities with Iran.
The US June S&P Composite-20 Home Price Index rose +2.1% y/y, stronger than expectations of +1.8% y/y and the largest year-over-year increase in a yr.
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US July new home gross sales fell -10.5% m/m to a 6-month low of 607,000, weaker than expectations of 620,000.
The US July Richmond Fed manufacturing survey of present circumstances unexpectedly fell -1 to 4, weaker than expectations of an increase to 7.
The Conference Board US Aug shopper confidence index fell -0.8 to a 7-month low of 89.4, weaker than expectations of 90.2.
The markets are discounting a 40% probability of a +25 bp price hike at the next FOMC assembly on September 15-16.
EUR/USD (^EURUSD) is up by +0.07% as we speak. The euro is transferring greater as we speak amid weak spot in the greenback. Also, better-than-expected Eurozone financial information boosted the euro as we speak after German Q2 GDP was revised upward and the Aug IFO business climate survey rose more than expected to a 1-year high. Also, as we speak’s -3% plunge in crude oil costs to a 1-week low supports the Eurozone economic system and the euro, as Europe imports most of its vitality.
German Q2 GDP was revised upward to +0.3% q/q and +1.0% y/y from the beforehand reported +0.2% q/q and +0.9% y/y.
The German Aug IFO business climate survey rose +2.1 to a 1-year high of 88.8, stronger than expectations of 87.2.
The markets are discounting a 94% probability of a +25 bp ECB price hike at its next coverage assembly on September 10.
USD/JPY (^USDJPY) is up by +0.11% as we speak. The yen is under strain as we speak and continues to undergo from weak rate of interest differentials, with the BOJ’s present coverage price of 1.00% properly below the Fed’s federal funds price goal vary of 3.50%-3.75%.
Losses in the yen are restricted, as as we speak’s -3% fall in crude oil costs to a 1-week low is constructive for Japan’s economic system and the yen, as Japan imports more than 90% of its vitality. Also, decrease T-note yields as we speak support the yen.
The yen has underlying support from elevated expectations of a BOJ price hike in either September or October. The authorities favors a price hike to support the yen and forestall inflationary pressures stemming from the weak yen. Finally, the yen has ongoing support from the latest coordinated US-Japan intervention and fears that further intervention might be forthcoming if the yen stays weak. The markets are discounting an 82% probability of a +25 bp BOJ price hike at the September 18 coverage assembly.
The Japan June main index CI was revised upward by +0.1 to 116.5 from the beforehand reported 116.4.
October COMEX gold (GCV26) is down -17.90 (-0.38%) as we speak, and September COMEX silver (SIU26) is down -0.779 (-1.14%).
Precious metals costs are transferring decrease as we speak, as power in shares has curbed safe-haven demand for treasured metals. Also, as we speak’s report from the New York Times that said the US State Department is making ready to ship US diplomats back to embassies in the Middle East suggests the US does not anticipate ramping up hostilities against Iran, thus easing geopolitical issues and decreasing safe-haven demand for treasured metals.
Losses in treasured metals are restricted as as we speak’s -3% plunge in crude oil costs lowers inflation expectations that could persuade the world’s central banks to loosen financial coverage, a bullish issue for treasured metals. Also, Monday’s report from CNBC is bullish for treasured metals, as the report said the Treasury could use the Treasury General Account to fund expanded buybacks of longer-dated US authorities bonds, bolstering issues over greenback debasement and rising demand for treasured metals as a store of worth.
Recent fund support for treasured metals is bullish for costs, as long holdings in gold ETFs climbed to a 3.25-month high as we speak. Long holdings in silver ETFs also rose to a 4.75-month high as we speak.
Strong central bank demand for gold is supportive of gold costs, following the Aug 7 information that bullion held in China’s PBOC reserves rose by +640,000 ounces to 76.08 million troy ounces in July, the twenty-first consecutive month the PBOC boosted its gold reserves.
On the date of publication, Rich Asplund did not have (either straight or not directly) positions in any of the securities talked about in this article. All info and knowledge in this article is solely for informational functions. This article was initially printed on Barchart.com
