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Forex Today: Spotlight on European Inflation Data and US ADP Report.

This is what you need to know to trade today Wednesday, August 31:

Markets remain relatively subdued midweek as investors await euro zone inflation data. In the second half of the day, the new ADP employment report for the private sector will be the protagonist of the US economic docket. In early morning Europe, US stock index futures are up more than 0.5% and the 10-year US Treasury yield is flat around 3.1%. After closing the second day in a row virtually unchanged on Tuesday, the Dollar Index continues to move sideways below 109.00.

US ADP Jobs Forecast: Three Reasons to Expect August Data to Push Dollar Higher

Earlier in the day, data from China showed the NBS Manufacturing PMI rose to 49.4 in August from 49 in July. Additionally, the Non-Manufacturing PMI came in at 52.6, beating market expectations of 52.2. Despite the upbeat data, the Shanghai Composite Index lost nearly 1% on the day. Investors are increasingly concerned about a lasting slowdown in the Chinese economy after authorities decided to impose tougher coronavirus-related restrictions on cities including Shenzen, Chengdu and Dalian.

The EUR/USD managed to hold above parity and posted small daily gains on Tuesday. The euro zone’s annual Harmonized Index of Consumer Prices (CPI) is expected to rise to 9% in August’s flash estimate, from 7.9% in July. Several European Central Bank (ECB) policymakers were willing to consider a 75 basis point rate hike in September and helped the common currency hold its own against its rivals. Meanwhile, with the Nord Stream pipeline shut down for maintenance for three days, gas flows to Europe came to a complete halt and natural gas futures rose as much as 5% in European morning trading. At the time of writing, the EUR/USD pair is trading slightly higher at 1.0020.

Previous Eurozone inflation: A high CPI will cement a 75 basis point ECB rate hike next week

With crude oil prices falling nearly 5% on Tuesday, the pair USD/CAD gained bullish momentum and rallied to the 1.3100 area before entering a consolidation phase below that level on Wednesday. Statistics Canada is to release second-quarter Gross Domestic Product (GDP) data later in the session, which is expected to show the Canadian economy expanded at an annualized rate of 4.5% in the second quarter.

The GBP/USD on Tuesday it recorded its lowest daily close since March 2020, at 1.1655. The pair erased part of its daily losses early on Wednesday, but is still trading below 1.1700.

The USD/JPY started to stretch lower after Tuesday’s failed attempt to break above 139.00. The pair is trading in negative territory below 138.50 in European morning trading. “The Bank of Japan decided to maintain its loose policy bias at the July meeting, it expects to discuss at the September policy meeting whether it should continue to do so based on the data available at that time,” said Junko Nakagawa, a member of the board. BOJ’s monetary policy statement earlier in the day.

The Prayed lost nearly 0.8% on Tuesday as the 10-year US Treasury yield stayed comfortably above 3%. XAU/USD is having a hard time reversing its direction and is now posting small daily losses around $1,720.

The Bitcoin failed to capitalize on Monday’s gains and lost more than 2% on Tuesday. Nonetheless, BTC/USD remains above $20,000 so far on Wednesday. Despite having closed in the red on Tuesday, ethereum regained its bullish momentum and was last seen up nearly 4% on the day near $1,600.

Source: Fx Street

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