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Futures data from September 17th: Spot gold prices surged above the 3,700 mark overnight, with COMEX gold futures rising 0.23% to $3,727.50 per ounce, and SHFE gold futures closing up 0.19%. Expectations of a Federal Reserve rate cut, a weakening dollar, and geopolitical uncertainty are all contributing to golds performance. Focus is on the Federal Reserves September meeting and the subsequent Quarterly Economic Projections (SEP). The US dollar continued to weaken on Tuesday, with the US dollar index falling 0.74% to a low of 96.54, hitting a near two-month low. Furthermore, the dollar fell 0.9% against the euro, reaching its lowest level since September 2021. Regarding economic data, US retail sales for August, released on Tuesday, rose 0.6% month-over-month, exceeding expectations of a 0.2% increase. The previous reading was revised from 0.5% to 0.6%, demonstrating resilience in consumer spending. The Federal Reserve held its meeting early Thursday morning, and a rate cut is all but certain. With the US Presidents newly nominated Fed Governor, Milan, participating in the FOMC meeting, the published dot plot is expected to show a more dovish tone, with the number of rate cuts for 2025 expected to fluctuate between two and three. Furthermore, continued pressure from the White House on Powell and other governors is crucial. Concerns about the Feds independence may continue to exacerbate market volatility.According to the Wall Street Journal: Eli Lilly (LLY.N) will invest $5 billion to build a factory in Virginia, USA.Japanese Ministry of Finance: Japans exports to the United States fell 13.8% year-on-year in August; exports to the European Union increased 5.5% year-on-year in August.Japans seasonally adjusted merchandise trade account in August was -150.125 billion yen, compared with expectations of -341.3 billion yen and the previous value of -303 billion yen.Japans annualized rate of merchandise imports in August was -5.2%, in line with expectations of -4.2%. The previous value was revised from -7.50% to -7.40%.

Prior to the US midterm elections, the EURUSD falls slightly but maintains parity

Daniel Rogers

Nov 08, 2022 16:29

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Having reached Monday's high of 1.0031 during the Tokyo session, the EURUSD pair has retreated slightly. Minor selling has occurred as a result of the asset's waning upward momentum, but the asset maintains parity as the overall risk impulse remains positive.

 

In the interim, the US dollar index has significantly regained from 110.05 as investors become increasingly cautious ahead of the US midterm elections. Following a bullish Monday amid market confidence, S&P500 futures in Tokyo are exhibiting a flat-to-positive trend.

 

Following the hawkish comments of Richmond Federal Reserve (Fed) President Thomas Barkin, 10-year US Treasury rates have increased to 4.22 percent. The Fed official expects that policy tightening will continue at a steady pace until there are signs of a decline in inflationary pressures. He remarked that it would have made sense for the Fed to begin tightening earlier.

 

The outcome of the United States midterm elections will have a significant impact on the DXY and show the degree of political stability in the economy. Consequently, the race for the 435 House of Representatives seats and the 34 Senate seats will be closely observed.

 

Later this week, the release of the US inflation rate will remain a focus point. As a result of higher interest rates and falling fuel prices, inflationary pressures are expected to ease.

 

Investors in the Eurozone anticipate Retail Sales data. The economic data may remain negative at -1.3%, but they will improve from -2.0% previously. Despite growing pricing pressures, decreased retail sales imply a substantial decline in retail demand.


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