Market Drivers – US Session, August 15

The US Dollar Index exhibits obvious strength. It surged for the fourth day in a row on Tuesday, reaching its highest point in a month. With the help of rising risk aversion and a comeback in Treasury yields, the DXY was able to recoup its losses. Over 1% was lost on average by Wall Street stocks. The yield on the US 10-year Treasury originally fell to 4.16% before rising back beyond 4.20%, while the yield on the 2-year Treasury increased from 4.90% to 4.95%.

The USD/RUB fell from above 100.00 when the Russian Ruble stabilized. Following a special monetary policy meeting, the Central Bank of Russia (CBR) increased interest rates by 350 basis points to 12%.

The weak commodity prices and the dismal Chinese statistics have put pressure on the Antipodean currencies. NZD/USD fell for the sixth day in a row, ending under 0.6000. On Wednesday, the Reserve Bank of New Zealand will present its monetary policy, and it is not anticipated to alter. Similar to how it lost ground, the AUD/USD pair was trading just above the crucial 0.6450 support level.

EUR/USD reached a peak at 1.0950 before retracing to 1.0900, driven by a rebound in the US Dollar. In the Eurozone, GDP, Employment, and Industrial Production data will be released on Wednesday.

USD/JPY remained flat, hovering around 145.50 after testing the downside near 146.00 and finding support above 145.00.

Economic data

Stronger-than-anticipated wage data from the UK raised hopes for another rate hike from the Bank of England (BoE) and strengthened the pound. On Tuesday, the currency outperformed, with the GBP/USD rate progressively increasing and closing the day at 1.2700.

On Wednesday, the UK will release the July Consumer Price Index (CPI) inflation report, which will be closely watched. The CPI is anticipated to decrease from a June annual rate of 7.9% to a July annual rate of 6.7%.

In July, US retail sales increased by 0.7% as opposed to the 0.2% market projection, exceeding expectations. The NY Empire Manufacturing Index, however, decreased from -1 to -19. Economic data on Wednesday will include building permits, housing starts, and industrial production. Nevertheless, the key event to watch will be the release of the FOMC meeting minutes.

The Consumer Price Index rebounded in July in Canada to 3.3%, surpassing the expected 3%. The Canadian Dollar gained momentum briefly after the data. USD/CAD continued its upward trend and closed slightly below 1.3500, the highest level in more than two months.

What to watch on Wednesday:

The Reserve Bank of New Zealand will issue its monetary policy decision. It is also release time for the UK inflation report. Data on the GDP, employment, and industrial production of the Eurozone will be made public. The Fed will publish the minutes of its meeting later in the day.

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