21/08/2024 - 07:45 UTCThe US Dollar has fallen to a seven-month low amid declining Treasury yields with the Dollar index (USDX) ending the session 0.48% lower. Market Participants are now closely watching Chair Jerome Powell’s upcoming address at the Jackson Hole symposium for insights on potential future Fed rate cuts, with many already betting on a September reduction as nearly certain.
The drop in the Dollar aligns with a broader trend of falling Treasury yields and growing speculation of a more dovish Federal Reserve. As Powell's remarks on Thursday are highly anticipated, market participants are keen to glean any signals regarding the Fed's next moves.
Despite these developments, the broader outlook for the US economy remains strong. Recent data suggest that the economy continues to grow above its long-term trend, contradicting the market's expectation of aggressive monetary policy easing.
Wall Street's major U.S. stock indexes edged slightly down, halting a multi-session rally that had seen equities bounce back from earlier declines driven by recession fears.
The US 500 and US Tech 100 both saw eight consecutive days of gains, their longest winning streaks since November and December, respectively.
In Corporate news, Eli Lilly’s shares rose 3.1% after its weight-loss drug Zepbound was shown to significantly reduce the risk of Type 2 diabetes in pre-diabetic adults. Cybersecurity firm Palo Alto Networks surged 7.2% following fiscal 2025 revenue and profit forecasts that exceeded analyst expectations. Boeing shares fell 4.2% after the U.S. Federal Aviation Administration announced an airworthiness directive for the company’s 787 Dreamliner.
Gold prices reached a new record high on Tuesday as the prospect of lower U.S. interest rates weakened the dollar, driving more investment into the precious metal.
Focus this week is squarely on an address by Fed Chair Jerome Powell at the Jackson Hole Symposium on Friday. The minutes of the Fed’s late-July meeting are due later in the day.
The EUR/USD pair climbed 0.38% on Tuesday, surpassing the 1.1100 mark for the first time since last December, and setting a new high for 2024.
Looking ahead, the Pan-European Purchasing Managers Index (PMI) survey results are due on Thursday. In the U.S., key economic data releases are also scheduled for Thursday, including the US Purchasing Managers Index (PMI) results.
The annual Jackson Hole Symposium kicks off the same day, extending through the weekend. Investors are particularly keen on the release of the Federal Reserve’s latest Meeting Minutes on Wednesday, although the focus is likely to shift quickly to Thursday’s data.
Gold prices extended their record-breaking rally on Tuesday, maintaining a strong position above the critical $2,500 level.
The surge is attributed to a weaker dollar and increasing investor confidence that the Federal Reserve may cut interest rates in September.
Traders will be watching closely for insights from the minutes of the Fed’s July policy meeting on Wednesday and Fed Chair Jerome Powell’s keynote speech at the Jackson Hole symposium later in the week.
Oil prices declined almost 1% on Tuesday, hitting a two-week low, as concerns over Middle East supply eased following Israel's acceptance of a proposal to resolve disputes blocking a Gaza ceasefire deal. Additionally, economic weakness in China weighed on fuel demand.
U.S. Secretary of State Antony Blinken visited Egypt to push for progress on a Gaza ceasefire and hostage release deal, though significant differences remain.
Concerns over U.S. fuel demand pushed U.S. heating oil futures to their lowest levels since May 2023 for a second consecutive day.
U.S. crude oil stocks were seen rising last week by 347,000 barrels, according to market sources citing American Petroleum Institute figures on Tuesday. Official U.S. government inventory estimates are set to be released on Wednesday.
U.S. stocks closed slightly lower on Tuesday, ending their recent winning streak as markets awaited the Jackson Hole Economic Symposium, which begins on Thursday.
All three major U.S. stock indexes dipped slightly, ending a multi-session rally that had seen stocks recover from a sharp decline caused by recession concerns.
On Thursday, central bank representatives from around the world will gather in Jackson Hole, Wyoming, for the annual Economic Symposium. U.S. Federal Reserve Chair Jerome Powell is scheduled to speak on Friday, with market participants closely watching for insights on the number and timing of anticipated policy rate cuts this year and next.
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