Market weighs inflation risk

India had a reason to cheer up today. Moon has got two points today. The point where the Vikram lander touched down would be named “Shiv Shakti”, and where the?Chandrayaan-2 lander touched down would be known as “Tiranga Point”.

Jerome Powell on Friday said the Federal Reserve might need to raise interest rates further. He said that Fed is unsure whether interest rate was high enough to contain inflation within target of 2%. The good news is goalpost remains unchanged. But path ahead is not going to be a bed of roses. The U.S. non-farm payrolls report is due on the first day of Sep. Two possibilities, one the strong employment reading for August may refresh inflation concerns. Two, weak data shall drive concerns about the US economy cracking due to interest rate hike. Consumer price data due on Sep. 13 needs to walk a similar tightrope. And then comes the FOMC’s policy meeting on Sep 20. But Powell suggested that in Sep, interest rates would remain unchanged to evaluate incoming data.

The dollar index rose above 104.2 yesterday. The Australian dollar dipped below the $0.64 mark, its weakest since November 2022. The euro remained below the $1.08 mark, lingering around its weakest level since mid-June. The yield on the 10-year US Treasury note held near the 4.25% mark, remaining slightly below the 15-year high of 4.34%.

In commodities, WTI crude rose to trade at $80 per barrel. On the supply side, supply cuts from OPEC+ continue to support the market. Saudi Arabia and Russia would extend cuts into September. Gold dropped below $1,910 an ounce on Friday, facing pressure from a strong dollar. Copper prices in London pared away earlier gains, the loss was arrested by the potential support for China’s housing market. Sep and Oct are traditionally strong consumption months for copper in China. 3M LME copper finished the day below $8,370 a ton, $50 down from the 2nd ring trading. 3M LME ali was steady at $2,158 a ton.