Market Roundup
• US Redbook (YoY) 6.5%,6.3% previous
•US API Weekly Crude Oil Stock -2.790M, 0.700M forecast, -7.400M previous
Looking Ahead Economic Data (GMT)
•01:00 Australia Sep MI Inflation Expectations 4.5% previous
Looking Ahead Events And Other Releases (GMT)
•01:30 Japan BoJ Board Member Nakagawa Speaks
Currency Forecast
EUR/USD: The euro edged lower against the dollar on Tuesday after data showed German inflation fell in August. German inflation fell to its lowest level in more than three years in August, a second estimate confirmed on Tuesday, making it easier for the European Central Bank to cut interest rates this week.Inflation eased to 2.0% in August, its lowest level since June 2021, thanks to lower energy prices.German consumer prices, harmonised to compare with other European Union countries, had risen by 2.6% year-on-year in July.Core inflation, which excludes volatile food and energy prices, slowed slightly to 2.8% in August from 2.9% the previous month.. The euro was last at $1.1022, having fallen nearly 0.5% on Monday. Immediate resistance can be seen at 1.1118(38.2%fib), an upside break can trigger rise towards 1.1185(Aug 20th high).On the downside, immediate support is seen at 1.1000(Psychological level), a break below could take the pair towards 1.0958 (61.8%fib).
GBP/USD: The British pound was little changed against the dollar on Tuesday as investors awaited UK gross domestic product figures due before this month's Bank of England meeting. On Wednesday, the UK economy will be assessed with the release of July's GDP data. After a stagnant performance in June and a modest 0.6% growth over the preceding three months, a further weak GDP report could place additional pressure on the British pound.Markets also looked to Wednesday's U.S. inflation print for clues about the Federal Reserve's interest rate path.Sterling last trading at to $1.3082, having earlier peaked at $1.3107. Immediate resistance can be seen at 1.3153(38.2%fib), an upside break can trigger rise towards 1.3240(Sep 6th high).On the downside, immediate support is seen at 1.3060(50%fib), a break below could take the pair towards 1.2949(61.8%fib).
USD/CAD: The Canadian dollar weakened against its U.S. counterpart on Tuesday as oil prices fell and the Bank of Canada said global trade disruptions could make it harder for the central bank to consistently meet its 2% inflation target. Bank of Canada Governor Tiff Macklem, speaking to the Canada-UK Chamber of Commerce in London, noted that with the slowdown in globalization, the cost of global goods may not decrease as significantly, which could exert additional upward pressure on inflation. However, in conversations with reporters, Macklem indicated that larger interest rate cuts could still be considered if economic growth fails to meet expectations. The loonie was trading 0.3% lower at 1.36 to the U.S. dollar. Immediate resistance can be seen at 1.3616 (50%fib), an upside break can trigger rise towards 1.3667(61.8%fib).On the downside, immediate support is seen at 1.3573(38.2%fib), a break below could take the pair towards 1.3511 (23.6%fib).
USD/JPY: The dollar edged lower against the yen as on Tuesday as markets looked to Wednesday's U.S. inflation print for clues about the Federal Reserve's interest rate path. The inflation reading could affect whether the Federal Reserve delivers a regular 25 basis point (bps) rate cut or a 50 bps one at its Sept. 17-18 policy meeting. The headline CPI is projected to have increased by 0.2% month-on-month in August, unchanged from the previous month, according to a recent poll. Markets are currently fully pricing in a 25 bps cut from the Fed next week, with a 50 bps cut priced in at 30%, the CME FedWatch tool showed. Strong resistance can be seen at 143.67 (Sep 9th high), an upside break can trigger rise towards 145.00 (Psychological level). On the downside, immediate support is seen at 142.08(23.6%fib), a break below could take the pair towards 140.52 (Lower BB).
Equities Recap
European lost ground on Tuesday, impacted by losses in bank and energy stocks. Investors remained cautious ahead of crucial U.S. inflation data and an anticipated European Central Bank rate cut later in the week.
UK's benchmark FTSE 100 closed down by 0.78 percent, Germany's Dax ended down by 0.96 percent, France’s CAC finished the day down by 0.24 percent.
Wall Street's benchmark S&P 500 index closed up 0.5% on Tuesday, but concerns about slowing economic growth limited gains. The Dow Jones Industrial Average edged lower as bank stocks fell following warnings of weakness in the current quarter, while energy shares also dropped.
Dow Jones closed down by 0.23% percent, S&P 500 closed up by 0.45% percent, Nasdaq settled up by 0.84% percent.
Commodities Recap
Gold prices remained steady above the $2,500 mark on Tuesday as market participants positioned themselves ahead of U.S. inflation data, seeking further insights into the potential depth of interest rate cuts by the Federal Reserve next week.
Spot gold rose 0.3% to $2,512.38 per ounce by 14:03 p.m. ET (1803 GMT). U.S. gold futures settled 0.4% higher at $2,543.1.
Brent crude futures settled at their lowest level since December 2021 on Tuesday, following OPEC+'s downward revision of its demand forecast for this year and 2025, which outweighed concerns about supply disruptions from Tropical Storm Francine
Brent crude futures settled down $2.65, or 3.69%, at $69.19 a barrel. U.S. West Texas Intermediate (WTI) crude settled down $2.96, or 4.31%, to $65.75 a barrel.
