U.S Crude Oil Inventories, FOMC Member Waller Speaks
The dollar index (USDX) fell 0.3% to 100.482, having earlier touched its lowest point since last year. In August, the dollar has dropped 2.92%, setting it on track for its largest monthly decline since November 2022.
The greenback weakened further after data showed US house prices dipped 0.1% month-on-month in June, following an unchanged reading in May. On a year-over-year basis, house prices increased by 5.1%, marking the smallest annual gain since July 2023.
Tuesday's report also indicated that US consumer confidence rose in August, with the Conference Board's Consumer Confidence Index increasing to 103.3, up from a revised 101.9 in July. However, the market reaction to this data was muted.
According to LSEG calculations, the rate futures market currently reflects a 37% chance that the Fed will opt for a 50-bps cut, unchanged from late Friday. Futures traders are pricing in approximately 106 bps of cuts throughout 2024.
In Corporate news, investors are eagerly awaiting Nvidia's quarterly report today and upcoming economic data, which could provide insights into the future direction of interest rate cuts. Nvidia's stock has surged 159% in 2024, positioning it as a major beneficiary of advancements in AI technology. The company's upcoming results follow recent concerns over rising expenditures by major tech firms like Microsoft and Alphabet as they vie for leadership in the burgeoning AI space.
Investors are now looking ahead to the preliminary estimate for second-quarter gross domestic product (GDP), jobless claims, and the personal consumption expenditures (PCE) index, the Federal Reserve’s preferred measure of inflation.
EUR/USD
The EUR/USD pair edged higher on Tuesday, supported by a broad easing in US Dollar demand. After starting the week with a slight pullback from recent gains, a renewed wave of risk-on sentiment helped push the pair back toward its recent highs.
Wednesday is expected to be a relatively quiet day for the markets, with little significant economic data on the Eurozone side. Market participants will be watching for comments from Fed Board of Governors member Christopher Waller, scheduled early in the US trading session. Additionally, investors will keep an eye on any developments from the EU’s Eurogroup meeting, which is set to take place during the European market session.
Gold
Gold prices edged higher on Tuesday, driven by a weaker US dollar, as investors looked ahead to key inflation data that could shed light on the scale of the anticipated interest rate cut by the Federal Reserve next month.
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Gold continues to hold above the $2,500 per-ounce psychological level, and it is on track for its best performance since 2020, fuelled by investor optimism over upcoming U.S. rate cuts and ongoing concerns about geopolitical tensions in the Middle East.
Investors are now awaiting the release of the Personal Consumption Expenditures (PCE) data, a crucial inflation report and the Federal Reserve's preferred gauge of inflation, due on Friday.
WTI Oil
Oil prices settled lower on Tuesday, breaking a three-session rally as traders assessed demand ahead of new U.S. inventory data expected this week.
Goldman Sachs has revised its expected trading range for Brent crude oil prices down to $70-$85 per barrel, a $5 per barrel reduction from its previous estimates. This adjustment reflects Goldman Sachs' cautious outlook on global oil markets.
U.S. crude inventories decreased by about 3.4M barrels for the week ended Aug. 23, compared with a build of 347,000 barrels reported by the API for the previous week. Economists were expecting a decline of about 3M barrels. The official government inventory report is due Wednesday.
US 500
U.S main indexes closed higher on Tuesday as investors are eagerly awaiting Nvidia's quarterly report due on Wednesday, as well as key economic data later this week that could offer insights into the trajectory of potential interest rate cuts.
Tech stocks showed mixed performance, with attention focused on Nvidia, a central player in the surge of AI-related stocks on Wall Street.
Data released on Tuesday showed that U.S. consumer confidence climbed to a six-month high in August. However, concerns about the labor market lingered as the unemployment rate rose to nearly a three-year high of 4.3% last month.
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