What to watch for on Wednesday, August 31:
The gloomy market environment eased early on Tuesday, although investors are far from optimistic. The USD lost some ground during the first half of the day, mostly against its high yielding rivals, but rallied during US trading hours, rising against most major rivals except the Euro.
The EUR/USD pair traded around 1.0010, slightly higher for the second day in a row, as the odds of a 75 basis point rate hike in September continued to rise. Several European Central Bank officials are talking about accelerating quantitative easing to control inflation. The German CPI rose 7.9% year-on-year in August, according to preliminary estimates, while the EU is to release inflation figures on Wednesday.
On the other hand, the GBP/USD pair fell to a fresh two-year low at 1.1620, ending the day a handful of pips above the level.
Commodity-linked currencies suffered the most from weak oil and gold prices. The AUD/USD pair is struggling around 0.6860, while the USD/CAD reached a high of 1.3107, and is now trading a handful of pips below that high.
The shiny metal is trading near its August low of $1,720.28 and is technically poised to extend its slide. Crude oil prices fell on news that Iran and the US have reached an agreement on the Iranian nuclear deal that would be announced in two to three weeks. Furthermore, Tehran reported that exports had not been affected by the political clashes in Baghdad. A barrel of WTI is currently trading at $91.70.
USD/CHF is modestly higher and trades around 0.9730, while USD/JPY is little changed on the day and hovers around 138.60.
Asian and European indices posted modest intraday gains, but Wall Street veered south and closed in the red, with the major indices down about 1% each.
Source: Fx Street
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