Noor Trends News, Technical Analysis, Educational Tools and Recommendations
After a quiet trading week’s beginning on Monday, storms came one after another though Tuesday was ted to be quiet in terms of economic data; the first storm impacted commodities, because in response to data that suggested a potential global economic slowdown, risk appetite deteriorated on Tuesday, and the EUR/USD ended the day down by 0.42%, closing at about 1.0954. Additionally, the news that Italy would impose a one-time 40% tax on bank profits quaked the whole Eurozone, which led to a decline in the Euro. The EUR/USD was trading at 1.0956 after the news.
Gold Price
Gold delves into the new trading week with negative performance around the $1910 mark, specifically trading at $1914.28 at the time of writing, so, the trading week begins with no major surprises and a lighter macro line during the weekend. The Gold Index dropped for three consecutive weeks in the last, falling the most since mid-June at the latest, amid firmer US Treasury bond yields and the US Dollar. Also weighing on the Gold Price could be the fears emanating from China. It should be noted that a slew of data from the United States and China stand tall to challenge the gold price moves this week.
Inflation, Other data
US inflation data and the resurfacing crisis in the US banking sector were the main concern of the markets during the previous trading week.
The US Producer Price Index (PPI) data and University of Michigan’s Sentiment Index have been significant market drivers prior to the weekend.
Better than anticipated, the University of Michigan’s Sentiment Index increased to 71.2, while expectations for consumer inflation over the next five years decreased to 2.9%. The reading is considered optimistic, and PPI data showed that the headline figure increased to 2.4% YoY in July, which was a little higher than anticipated.
The US inflation picture is mixed overall as a result of this and the US’s announcement this week that the headline and core Consumer Price Index (CPI) both declined in the same month.
The US Consumer Price Index rose 3.2% from a year ago in July, indicating that inflation has lost at least some of its grip on the US economy. However, the annual rate was slightly below expectations of 3.3% and the lowest level since March 2021.
The number of Americans filing jobless claims increased by 21,000 last week to 248,000 in the week ending August 5, sharply above expectations of 230,000 and 27,000 above the five-month low from the previous week. On the other hand, continuing jobless claims fell by 26,000 to 1,674,000 in the last week of July, surprising the markets which had expected an increase of 18,000, indicating that unemployed people still have relative ease in finding a job.
Moody’s shocking US banks
A few days after Fitch, major independent agency assessing creditworthiness, had downgraded US government’s credit rating cut the rating from the top level of AAA to a notch lower at AA+ following concerns over the state of the country’s finances and its debt burden, Moody’s also reduced the outlook for 11 other US banks to “negative”, most notably Capital One and Citizen Financial.
Analysts at Moody’s credit rating agency said: “US banks continue to face significant risks related to interest rates and asset-liability management that imply negative signals to liquidity and capital available to them as a result of abnormal monetary policy that leads to a depletion of deposits at the global level. The entire banking system is a high interest rate that reduces the value of assets.”
Oil Inventories
US oil inventories rose sharply in the week ending August 4, according to government data from the US Energy Information Administration. Inventories of crude oil increased by 5.851 million barrels, compared to the previous reading, which recorded a decline of -17.049 million barrels, which exceeded market expectations, which indicated a less sharp rise by 576 thousand barrels.
The US oil output rose to 12.6 million barrels per day, compared to the expected rate of 12.2 million barrels per day. By the end of last week’s trading, oil was able to reverse its trend on Friday, since the beginning of trading, after losses it suffered in the previous session due to profit-taking. Oil relied on the strong return on some of the support factors available for both types of oil futures contracts.
US crude futures rose to $83.34 a barrel, compared to the previous daily closing of $82.82 a barrel. Oil fell to its lowest level in the last trading day of this week at $28.27, compared to a high of $83.55.
What to watch this week:
The release of the FOMC minutes and data on retail sales are among the important events in the US for the following week. Investors and market participants will pay particular attention to the Fed’s officials’ remarks as they get ready for the Jackson Hole Symposium. Data on employment and inflation will be released in the UK. The RBNZ’s monetary policy meeting will take place. Australia will disclose employment data, and the RBA will publish the minutes of its meeting. The inflation data for Canada should likewise be made public.
