The US dollar was relatively stable on Wednesday, with the USDX posting a modest 0.04% gain on the day. Nevertheless, the index is currently trading at a six-month high. Weak economic data reports from China and Europe earlier this week have sparked fears among investors that global growth and risk appetite will remain weak, prompting investors to look to the dollar as a safe haven. In addition, US data released on Wednesday showed that the country’s service sector activity grew more-than-expected in August, raising concerns that inflation rates remain high. This turn of events provides further support for the dollar as it encourages a dovish stance from the Federal Reserve.
Positive dollar momentum was also seen in some emerging market currency pairs, such as the US dollar. B. USD/ZAR up 0.26%, USD/CNH up 0.25% and USD/MXN up 0.25%. The second session in a row was above 1%.
Precious metals have been down so far this week: gold is down more than 1%, while silver is currently – as of early Thursday – trading down more than 4.5% a week. Part of this move may be due to the dollar’s recent strength and high Treasury yields, as signs of persistent inflation increase the likelihood that the Federal Reserve will remain aggressive.
Major US stock indexes fell for a second straight session on Wednesday, with the US 500, US 30 and US Tech 100 falling 0.69%, 0.65% and 0.85% respectively. Weak performance came from Apple, whose share price fell 3.6% after the Wall Street Journal reported that China had banned officials at central government agencies from using iPhones and other foreign-branded devices.
Some price action was seen this Thursday following the release of Italy’s retail sales, revised euro-zone GDP and US crude oil inventories. Also in the spotlight is the US jobless claims report, which is expected to show the job market remains healthy. Conversely, initial jobless claims are likely to rise slightly to 235k from 228k in the previous week. FOMC member Harker and several other Fed members could also attract investor attention throughout the session.
Major US indices closed lower on Wednesday. The US Tech 100 ended the session down 0.85%, while the US 500 and US 30 posted losses of 0.69 and 0.65% respectively, while the US Treasury bond yield rose – Expected data from the US services sector suggest inflationary pressures will persist.
Federal Bank of Boston President Susan Collins said that while there are signs of progress in cooling inflation, now is the time for the central bank to be cautious about its next monetary policy moves.
Apple shares weighed heavily on Wall Street stock indexes, falling 3.6% after the Wall Street Journal reported that China had banned central government agency officials from using iPhones and other foreign-branded devices at work.