22/08/2024 - 08:29 UTCThe US Dollar (USD), as reflected by the US Dollar Index (USDX), showed no signs of recovery, ending Wednesday's session around 101.070 and adding moderate losses of 0.18% for a third consecutive session.
This decline is driven by growing expectations of dovish actions from the Federal Reserve (Fed) and ongoing challenges with US Treasury yields. The release of the July Federal Open Market Committee (FOMC) minutes further intensified speculation, revealing that most participants were open to a potential rate cut in September.
The minutes from the Fed's July 30-31 meeting indicated a strong inclination among policymakers to cut interest rates at the upcoming September meeting, with several members advocating for immediate action. Most participants agreed that easing would be warranted if economic data aligned with expectations. They noted that current interest rates were viewed as restrictive, and maintaining them could further slow economic activity, especially given easing inflation pressures.
In Corporate news, Target Corporation stock rose 11% after the big box retailer raised its annual profit forecast and beat expectations for second-quarter comparable sales, with customers drawn in by low priced groceries and essentials. Chinese e-commerce firm JD.com stock fell over 4% after Bloomberg reported that Walmart planned to sell its stake in the firm for about $3.7 billion.
On the energy front, Oil prices declined by $1 per barrel on Wednesday after the U.S. government significantly revised down a set of employment statistics closely monitored by investors. Brent fell 1.41%, settling at $76.14 per barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped 1.79%, to settle at $71.83 per barrel.
In other news, a Greek-flagged oil tanker was left adrift in the Red Sea on Wednesday following multiple attacks that ignited a fire on the vessel and caused a loss of power, according to the UK maritime agency. The Red Sea, a vital shipping route leading to the Suez Canal, is crucial for global oil transport, and continued attacks in the area could threaten global crude flows.
EUR/USD surged to a fresh 13-month high on Wednesday, briefly surpassing 1.1150 and ended the session 0.25% higher.
The Fed's latest Meeting Minutes revealed that discussions about when to implement rate cuts began as early as July, further increasing the likelihood of at least a quarter-point cut on September 18.
On Thursday, the Pan-European Purchasing Managers Index (PMI) survey results are expected, with EU Manufacturing and Services PMIs for August projected to hold steady at 45.8 and 51.9, respectively.
US Manufacturing PMI expectations for August are forecast to remain stable at 49.6, while the Services PMI is expected to decrease by a full point to 54.0 from 55.0.
Gold prices ended Wednesday's session almost unchanged after the U.S. Federal Reserve's latest meeting minutes revealed a strong inclination among officials to cut interest rates at the September policy meeting.
During the July meeting, the minutes showed that "the vast majority" of policymakers believed that if the economic data continued to meet expectations, it would likely be appropriate to ease policy at the next meeting.
The market's attention now shifts to Fed Chair Jerome Powell's keynote speech at the Jackson Hole symposium on Friday.
Oil prices declined on Wednesday as fresh concerns about the U.S. economy, triggered by a sharp downward revision in employment figures, overshadowed a larger-than-expected drop in domestic crude inventories.
The Bureau of Labor Statistics revised March 2024's employment gains down by 818,000 positions earlier in the session as part of its annual benchmark review of payroll data. This data renewed investor concerns about a slowing economy and its potential impact on crude demand.
Meanwhile, the Energy Information Administration reported that U.S. crude inventories fell by 4.7 million barrels in the week ending August 16, significantly beating expectations for a 2 million barrel draw.
All three major U.S. stock indexes closed modestly higher, with the US Tech 100 benefiting from gains in semiconductor stocks.
The minutes indicated that Fed officials were already leaning strongly toward a rate cut at the upcoming September meeting. This sets the stage for the Jackson Hole Economic Symposium, which begins on Thursday, with Fed Chair Jerome Powell scheduled to speak on Friday.
In other economic news, the Labor Department issued a preliminary benchmark revision to payroll data for the 12 months through March 2024. The revision slashed the previously reported 2.9 million payroll additions by 818,000—the steepest preliminary downward adjustment since the global financial crisis—suggesting that the labor market's apparent softening may be more significant than previously thought.
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