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Caution prevailed on Tuesday, with the focus still on a potential global recession. The dollar maintained its dominance despite a short-lived knee-jerk at the beginning of the American session.
Wall Street closed mixed, with the DJIA posting substantial gains, the S&P 500 modestly up, and the Nasdaq Composite shedding some ground.
Economic Data
The US Industrial production increased 0.6% in July after decreasing in June. Total industrial production in July was 3.9% higher than its year-earlier level. Furthermore, total industrial production advanced at an annual rate of 1.3% for the second quarter as a whole.
The number of housing starts across the US fell sharply in July as the combination of rising prices and more expensive mortgage loans took more heat out of an overstretched market. Housing starts fell nearly 10% to 1.446 million in July, their lowest since August 2020, below forecasted of 1.540 million.
Building permits, meanwhile, held up somewhat better. The number of new permits edged down by 1.3%; less than expected – to 1.674 million from 1.696 million a month ago.
Other Developments
The EUR/USD pair extended its weekly decline to 1.0121, ending the day at around 1.0160. The European energy crisis remains in the eye of the storm as the Union aims to reach a nuclear deal with Iran. Meanwhile, Germany has plans to postpone the closure of the country’s last three nuclear power plants.
GBP/USD trades around 1.2090 following the release of unimpressive UK employment data. The ILO unemployment rate held steady at 3.8% in the three months to June,
The USD/CAD pair edged lower, ending the day at 1.2840. Bank of Canada Governor Macklem said inflation may have peaked after the country released the July Consumer Price Index, which rose by less than anticipated.
AUD/USD finished the day unchanged at around 0.7020. The US dollar appreciated against safe-haven rivals, with USD/CHF trading at around 0.9500 and USD/JPY around 134.20.
Gold eased modestly, now changing hands at $1,777 a troy ounce. Crude oil prices were firmly down, and WTI trades at $86.30 a barrel. Treasury yields advanced, and the yield curve remains inverted. The yield on the 10-year note currently stands at 2.81%.
The macroeconomic calendar will turn more interesting on Wednesday, with Australian wages figures, EU GDP and US FOMC Meeting Minutes.
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