Market Drivers – US Session 19/09/2022

Mohamed Abdelhamid 20 September, 2022 2:49 am Forex Market, Market Update

The week has got a lot of volatility and most assets are in slow motion with an almost empty macroeconomic data. The UK was on holiday honoring the funeral of the late Queen Elizabeth II. Fifteen major central banks will announce their policy decisions later the week.

Economic Data

Monday’s U.S. economic news was bearish for the dollar after the Sep NAHB housing market index fell -3 to a 2-1/4 year low of 46, weaker than expectations of 47.

Other Developments

The Euro initially moved lower on economic concerns after the Bundesbank said that “there are increasing signs of a recession of the German economy.”

ECB Vice President Guindos said, “the economic slowdown in the Eurozone will not reduce inflation by itself. Monetary policy needs to contribute to ease inflation.” ECB Governing Council member and Bundesbank President Nagel said, “we are far away from interest rates that are at a level that is appropriate given the state of inflation. We’re still a good way off” from the neutral rate.

The dollar advanced throughout the first half of the day but later on the day, gave up some of its gains in the American session, ending the day with modest losses against most of its major rivals.

The USD moved alongside the markets’ sentiment; the latter set by equities. Asian and European indexes closed in the red, but Wall Street abandoned the negative tone and trimmed most of its early losses.

Russia and China agreed to extend their cooperation on defense, focusing on joint exercises and weighing on the market’s mood.

US Treasury yields maintained the upward pressure, with the near-term bonds yielding the most. The EUR/USD pair trades around 1.0020, while GBP/USD hovers around 1.1430. The AUD/USD pair currently trades at 0.6725, while USD/CAD is down to 1.3255. Finally, the USD/JPY pair remained stable and changes hands at 143.20.

Commodities fell at the beginning of the day but finished it flat, with gold trading at $1,674 a troy ounce, then lost 4 dollars to trade at $1,670 before it is last seen trading at $1,675.55 at the time of writing and WTI at $84.90 a barrel at the end of the US session.

Early on Tuesday, the investors’ attention will shift to the Reserve Bank of Australia Meeting Minutes to seek clues on future rate hikes.

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