02/09/2024 - 07:51 UTCThe dollar index (USDX) gained for another day against most of its major peers on Friday, with the dollar index adding another 0.30% to end a third consecutive session in green hitting two week highs against the euro. With a focus on the upcoming U.S. jobs report, traders scaled back expectations for aggressive Fed rate cuts. The dollar strengthened against the yen, supported by rising Treasury yields following a stable inflation reading, which lessened the need for a 50-basis-point rate cut on September 18th.
The U.S. dollar is anticipated to experience a subdued start to the week due to a national holiday on Monday. However, a series of significant macroeconomic data releases, culminating in the non-farm payrolls report on Friday, are expected to drive market activity.
The CME's FedWatch tool suggests a 69% chance of a 0.25% rate cut in September, while a 0.5% cut is seen as less likely at 31%. November odds for another cut stand above 42.1%.
U.S. stock index futures extended their winning streak to four months on Friday, despite a mid-August selloff with the US 30 hitting a new record high on Friday. A stronger dollar, fueled by upbeat U.S. economic data, supported the rally. The PCE price index, the Fed's preferred inflation gauge, was in line with expectations limiting the need for steep rate cuts.
Cryptocurrency prices, led by Bitcoin and Ethereum, retreated towards weekly lows ahead of a pivotal month. Investors eagerly await the FOMC meeting, a potential Kamala-Trump debate, and the TOKEN2049 conference, all of which could significantly impact global markets and cryptocurrency sentiment.
In the energy sector, both WTI and Brent crude fell sharply on Friday by 2.83% and 2.34% respectively as investors weighed the prospect of increased OPEC+ supply and a less aggressive Fed rate cut, following strong consumer spending data.
For the week ahead market participants are focused on several critical data releases that could significantly influence price movements. These key indicators include US jobless claims, non-farm employment change, unemployment rate ISM services PMI and JOLTS Job Openings.
The EUR/USD pair continued its downward trend on Friday, marking a third consecutive day of losses and pushing the pair just above the level of 1.105.
European Union inflation data released earlier on Friday failed to generate much market excitement, and the U.S. Personal Consumption Expenditure Price Index (PCE) remained close to expectations. This left market participants focused on the Federal Reserve’s upcoming rate decision on September 18.
The U.S. PCE figures for July came in largely as expected, with month-over-month core PCE inflation steady at 0.2%. The year-over-year core PCE inflation also held steady at 2.5%, just shy of the forecasted 2.6%.
This week will start on a subdued note, with U.S. markets closed for the Labor Day holiday.
Gold prices slipped 1% on Friday as a stronger dollar and firmer Treasury yields followed U.S. inflation data that aligned with expectations.
Despite this dip, gold is poised for a monthly gain, with market expectations of a possible interest rate cut by the Federal Reserve in September still intact.
Following the latest inflation report, traders have slightly increased their expectations of a 25-basis-point rate cut by the Fed next month to 69%, while the probability of a 50-basis-point cut has decreased to 31%, according to the CME FedWatch Tool.
Oil prices fell on Friday, driven by expectations that OPEC+ may increase production in October, amidst ongoing concerns about the strength of global oil demand.
U.S. oil prices declined nearly 6% in August, as fears of a global economic slowdown cast a shadow over demand forecasts.
In addition to demand concerns, potential supply increases weighed on market sentiment, with fears that OPEC and its allies, known as OPEC+, may proceed with plans to boost production starting in October.
Wall Street stocks rose on Friday with Tesla and Amazon climbing after fresh U.S. economic data raised expectations that the Federal Reserve will cut interest rates modestly in September.
U.S. consumer spending increased solidly in July, suggesting the economy remained strong while prices rose moderately.
The personal consumption expenditures report came on Friday after Fed Chair Jerome Powell last week expressed support for an imminent policy adjustment.
In corporate news, Nvidia rose 1.5%, rebounding from a 6.4% drop on Thursday after the artificial intelligence-chip bellwether failed to match sky-high investor expectations, despite upbeat results and a broadly in-line forecast. Intel jumped almost 10% following a report exploring options that could include a merger.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.
Join iFOREX to get an education package and start taking advantage of market opportunities.
A beginner's e-book
$5,000 practice demo account
A 12-part video course
English (India) 
Arabic - العربيه
Chinese Simplified - 中文 (简体)
Chinese Traditional - 中文 (繁體)
English
Japanese - 日本語
Kazakh - Қазақ
Korean - 한국어 (대한민국)
Russian - Русский
Spanish - Español
Thai - ไทย
By