What to watch for on Wednesday, August 24:
The USD veered south after extending its rally throughout the first half of the day, ending the day lower against most major rivals. The catalyst was dismal US data, as the US Global Services PMI contracted to 44.1. At the same time, the manufacturing index expanded at a slower pace than expected, as the index dipped to 51.3 from 52.2 in July.
However, S&P global PMIs for most major economies indicated slowing economic progress and even contraction, indicating that this is a global problem. The greenback recovered some ground ahead of the close on Wall Street as risk aversion flows continue. The dollar’s decline looks corrective amid extreme overbought conditions. Scarce data out of the US helped investors take some profits, but there is no sign of a change in trend.
ECB Executive Committee member Fabio Panetta painted a gloomy picture. He said the central bank may have to tighten monetary policy further as the probability of a recession increases. Meanwhile, speculative interest is slowly but steadily raising bets of a 75 basis point US Federal Reserve rate hike in September.
GBP/USD is hovering around 1.1830, while AUD/USD is hovering around 0.6920. The USD/CAD pair fell sharply and ended the day at 1.2950.
Haven currencies posted gains against the dollar, with USD/CHF hovering around 0.9640 and USD/JPY trading at 136.77.
Gold is currently trading at $1.7477 a troy ounce, rising on the day, while crude oil prices extended their latest advance amid market talk suggesting OPEC+ could cut output. WTI is now at $93.60 a barrel.
The macroeconomic calendar will remain empty in Asia, with the focus on US Durable Goods Orders on Wednesday.
Source: Fx Street
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