The US dollar managed to strengthen during trading on Wednesday as investors weighed the prospects of a gradual easing cycle from the Federal Reserve. The cautious tone from policymakers, coupled with new home sales data that exceeded expectations at 800,000 units, has added to the currency’s appeal.
On the other hand, ongoing geopolitical tensions and rising global uncertainties continue to drive interest in safe-haven assets. Meanwhile, the market eyes crucial economic data from Germany this afternoon, which could influence future market movements.
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Here’s data from Trading Central:
- German consumer sentiment at 1:00 PM WIB: forecast -23 vs previously -23.6
GOLD
Gold prices halted a three-day rally on Wednesday, closing lower at $3,735 per troy ounce, mainly due to the strength of US economic data triggering selling pressure.
Nonetheless, the overall upward trend for gold remains robust. The high demand for this precious metal, fueled by expectations of rate cuts from the Federal Reserve and ongoing geopolitical tensions, supports prices throughout the day.
OIL
Oil prices rose in Wednesday’s trading, closing at $64.80 per barrel. This increase was driven by a decline in US weekly crude oil inventories and concerns that Ukraine’s attacks on Russian energy infrastructure could disrupt global supply.
The price rally is expected to continue this afternoon as these two supporting factors remain in play.
EURUSD
The selling pressure throughout Wednesday’s trading led to the EURUSD pair closing lower at 1.17283. The weakening business climate in Germany and the strengthening of the US dollar were the primary catalysts for this decline.
Market focus is now on German consumer sentiment data. If this data shows further weakening, additional selling pressure against EURUSD may arise this afternoon.
GBPUSD
GBPUSD also faced selling pressure throughout Wednesday’s trading, closing lower at 1.34417. The strengthening of the US dollar and dovish comments from Bank of England Governor Andrew Bailey, following a contraction in business activity, have contributed to the weakness of this pair.
Bearish sentiment is expected to dominate GBPUSD movements in the short term.
USDJPY
The USDJPY pair strengthened in Wednesday’s trading, fueled by declines in Japan’s services and manufacturing PMI data, as well as a rebound in the US dollar.
Volatility in USDJPY movements is anticipated to remain high this afternoon. The minutes from the July Bank of Japan meeting indicate that the policy board is likely to continue raising interest rates if inflation and economic growth meet projections.
NASDAQ
The Nasdaq Composite closed down for the second consecutive day at 24,747 at the end of Wednesday’s trading. Selling pressure emerged due to declines in major AI tech stocks like Nvidia, Oracle, and Micron Technology.
Investors are concerned that the valuations of these stocks are excessively high, prompting profit-taking that triggered a market downturn. Selling pressure is expected to persist this afternoon, potentially pushing the Nasdaq lower.
