Market Drivers – US Session – 06/09/2022

Mohamed Abdelhamid 7 September, 2022 4:01 am Forex Market, Market Update

The US dollar extended its gains, ending Tuesday higher against most rival currencies. The EUR and the JPY were the worst performers, falling to multi-year lows against their American rival. EUR/USD traded as low as 0.9863, now hovering around 0.9900, while USD/JPY trades a handful of pips below 143.07, a level that was last seen in 1998.

The Euro’s weakness is directly linked to the conflict with Russia, as the latter cut all gas provision to the Old Continent. Western nations are still looking to cap Russian oil.

The GBP/USD pair is also under pressure, but ending the day, little changed at around 1.1510.

Economic Data

US data unexpectedly beat expectations as the US Services PMI advanced to 56.9 in August, also beating the market’s expectations. Government bond yields soared, with the 10-year Treasury note currently yielding 3.34%.

Other Developments

UK’s new Prime Minister Liz Truss has announced energy bail-outs to cope with the crisis that affects all of Europe. Truss proposed to freeze roughly £130 billion in household energy bills while mulling another £40 billion for small businesses.

Wall Street seesawed between gains and losses along the session but gave up ahead of the close. Major indexes closed in the red, despite their European counterparts being able to post modest gains.

The Australian dollar was the weakest commodity-linked currency, with AUD/USD down to 0.6730 after the RBA hinted it would slow the hiking pace. The country will release Q2 Gross Domestic Product early on Wednesday.

The USD/CAD hovers around 1.3150, helped by weakening crude oil prices. WTI currently trades at $86.80 a barrel. Spot gold trades at around $1,703 a troy ounce.

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