The Asian and European session on Thursday will be quiet in terms of economic data. However, later in the day, the US is expected to release the weekly jobless claims and durable goods orders report. Market participants are awaiting news from the Jackson Hole Symposium, where ECB Chair Lagarde and Fed Chairman Powell will deliver speeches on Friday.
Here’s what to know on Thursday, August 24:
The US dollar had its weakest day since early August as the DXY (Dollar Index) fell from its two-month highs around 104.00, dipping below 103.50. The dollar’s correction accelerated after the publication of the US PMI figures, weaker than expected. Weekly jobless claims and durable goods orders will be released on Thursday.
The US manufacturing PMI falls to 47 in August and the composite PMI stands at 50.4 points.
US Treasury yields pulled back from multi-year highs, putting pressure on the dollar lower. The 10-year yield fell below 4.20%, while the 2-year yield fell below 5%. In addition, the improvement in risk sentiment also had an impact on the dollar. The Dow Jones Index gained 0.54%, and the Nasdaq rose 1.59%.
Market participants await Fed Chairman Powell’s speech at the Jackson Hole Symposium on Friday. His words could set the framework for the coming months or reiterate previous messages. The next FOMC meeting is scheduled for September 19-20. According to CME’s Fed Watch tool, there is an 88% chance of a pause in interest rate hikes.
The Eurozone flash PMI for August came in below expectations, with the composite PMI falling from 48.6 to 47. The pair EUR/USD found support at 1.0800 and bounced from the 200 SMA towards 1.0860, driven by USD weakness. However, despite the correction, the general trend remains bearish.
Commerzbank Research on Eurozone data:
We see confirmed our forecast that the euro zone economy will contract slightly in the second half of the year. Today’s data also argues against another ECB rate hike. Until now, the ECB’s forecasts were based on the fact that the Eurozone economy would continue to grow notably in the second half of the year. Given today’s Purchasing Managers’ Index figures, the ECB is likely to revise these expectations and significantly lower its forecast for September.
GBP/USD was weakened by below expectations UK PMI data, with the Composite Index dipping below 50 for the first time since January. As a result, the pair bounced from levels near 1.2600 to around 1.2740. The June low near 1.25690 remains a key level to watch, and a break below could trigger further losses. On the other hand, the EUR/GBP pair rebounded from a year low below 0.8500 and settled around 0.8540.
The Japanese yen had its best day in weeks against the US dollar, driven mainly by lower government bond yields. The weaker-than-expected PMI data dampened expectations of further tightening from the European Central Bank (ECB) and the Bank of England. As a result, the USD/JPY pair fell below 145.00, reaching its lowest level in two weeks.
Australian PMI data came in below expectations. However, the Australian dollar benefited from the shift in market sentiment, triggering a rebound in the AUD/USD pair. from 0.6410 to 0.6479, reaching the highest level in a week. Although the main trend is still down, it would not be surprising to see further gains in the short term.
Retail sales in New Zealand experienced a 1% decline in the second quarter, better than the consensus forecast of -2.6%. Despite this, the NZD/USD pair rallied sharply for the second day in a row. However, it continues to trade below the 0.6000 level.
In Canada, retail sales increased 0.1% in June. However, excluding auto sales, there was an unexpected drop of 0.8%. At the same time, falling crude oil prices weighed on the Canadian dollar, causing the AUD and NZD to underperform. The USD/CAD pair it hit its highest level since May, above 1.3600, but then pulled back sharply towards 1.3520. The pair seems ready to prolong its bearish correction.
The decline in government bond yields contributed to the recovery of metals. Gold accelerated higher on Wednesday, approaching the 20-day SMA at $1,920. the silver it experienced a significant jump of almost 4%, breaking above $24.00 and reaching its highest level in three weeks.
The improvement in risk sentiment also had a positive impact on cryptocurrencies. Bitcoin rose 3% to $26,600, while Ethereum rallied 3.60% to $1,688.
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Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
