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The Italian Ministry of Finance announced that it will cap the tax on net interest income on the most vulnerable assets at 0.1%. The markets received this official announcement with a positive response after investors in the banking sector stocks in the country saw that it comes within the framework of attempts to calm the concerns raised by the decisions of credit rating agencies to downgrade the rating of a large number of US banks.
Economic Data
On Thursday, August 10, the US CPI report for July is expected to show a rebound in the annual rate from 3% to 3.3%, while the Core rate is anticipated to remain at 4.8%. The weekly Jobless Claims report will also be relevant. The US CPI forecasts from 10 major banks, with a monthly pace of 0.2%. The inflation figures in the US are likely to trigger volatility, and market participants are eagerly awaiting the data.
The Melbourne Institute is set to release the inflation expectations report on Thursday.
Key Developments
Ahead of the CPI report, the US Dollar posted mixed results, maintaining relative strength overall. US stocks experienced a decline, with the Nasdaq falling 1.17% and the Dow Jones losing 0.54%.
Crude oil prices rose to fresh multi-month highs, with the WTI barrel climbing 1.60% and breaking above $84.00. The US 10-year Treasury auction received decent demand, with its yield falling modestly to 4.01% and the 2-year rebounding to 4.80%.
In a quiet session for currencies, the US Dollar Index experienced a marginal decline, consolidating around 102.50. Euro/USD modestly rose to 1.0970, while USD/CHF rose for the second consecutive day but remains below 0.88000.
The GBP/USD pair is range-bound around 1.2750, and the UK will report GDP and Industrial Production data on Friday. USD/CAD marginally rose, closing slightly above 1.3420 but still far from its highs.
Market expectations that BoC would raise rates further by the end of the year crumbled recently, weighing on the CAD at the beginning of August. However, analysts maintain their outlook and see moderate CAD recovery potential in the medium term. AUD/USD traded within Tuesday’s range, remaining stagnant near 0.6540.
NZD/USD recorded its lowest daily close in two months around 0.6050 but managed to hold above the key support level of 0.6030. Gold prices continued to decline, with gold prices falling to $1,914 and silver losing ground to $22.65. Precious metals remain under pressure, struggling to initiate a sustainable recovery and showing no signs of a correction.
Italian bank shares rose on Wednesday after risk appetite rose after the government announced measures that would avoid future crises in the banking sector, including tax cuts and financial support for some categories of borrowers.
Also Read:
GBP/USD retreats ahead of US inflation, British GDP
US oil inventory surges while Australia’s strike triggers LNG price jump
EUR/GBP recovers amid stronger Euro
Gold price is testing three-month low ahead of CPI data
Gold price is testing three-month low ahead of CPI data
