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As markets anticipate a larger-than-expected rate cut by the Federal Reserve later this month, recent economic data suggests a slowdown in the US labor market, supporting the rate cut expectations. The Euro strengthened against the dollar as the US dollar’s value declined. Key economic indicators for the Eurozone, including factory orders, construction PMI, and retail sales, were scheduled for release.
The US Dollar (USD) trades lower this Wednesday after the JOLTS Job Openings report comes in softer than expected. The JOLTS report is backward looking and reports on the Job Openings for the month of July. In June, the number of job openings was still above 8 million, though eased substantially in July. The fact that the magic 8 million barrier gets breached with a print of 7.6 million job openings, points to a much bigger cooling in the job market than anticipated.
British Pound Rises
The British pound gained against the dollar, benefiting from the broader positive sentiment in the risk-on market. New car sales and the construction PMI were expected to be published in the UK.
Japanese Yen Appreciates
The Japanese yen strengthened against the dollar, driven by lower US yields and the weaker US dollar. Average cash earnings and foreign bond investment data were also due for release in Japan.
Australian Dollar Remains Stable
• Economic Concerns and Weaker Dollar: The Australian dollar remained relatively unchanged, influenced by concerns about China’s economy, the weaker dollar, and declining commodity prices.
• Australian Economic Data: Australia’s balance of trade and a speech by the Reserve Bank of Australia’s Michael Bullock were also scheduled for the day.
Canadian Rate Announcement
Bank of Canada Governor Tiff Macklem held a press conference following the central bank’s third consecutive 25-basis point rate cut. Inflation may rise later in 2024, with potential for stronger-than-expected upward pressures. However, the overall weakness in the Canadian economy continues to drive inflation down. Recent data indicate some downside risk to the bank’s July projection of stronger growth in the second half of 2024. There is a growing need to guard against the risk of an overly weak economy causing inflation to fall too much.
Fed Beige Book
The Federal Reserve’s latest Beige Book paints a picture of a sluggish US economy. Released on Wednesday, the report found that economic activity stagnated or even declined in most regions. While job losses were uncommon, businesses are being cautious. Hiring slowed, with some companies opting for shorter shifts, leaving positions vacant, or relying on attrition to reduce headcount. Employers are citing concerns about consumer demand and a cloudy economic future as reasons for their cautious approach.
Commodities
• Oil Prices Decline: Oil prices reached new year-to-date lows amid bearish sentiment among traders.
• Gold and Silver Prices Fluctuate: Gold and silver prices fluctuated, influenced by the weaker dollar and lower US yields. Silver prices rose slightly, supported by the downward trend in the dollar.
Also Read:
US equities face a downturn as September concerns materialize
USD/JPY Dives Deeper On Declining T-Yields
XAU/USD Rises Following Weak US JOLTS Data
Fed Beige Book: US Economy Shows Slowdown, But Hope Remains
EUR/GBP Recovers As Technical Indicators Remain Cautious
