The US Dollar continued to advance yesterday on fears of higher rates and economic slowdown but is showing signs of having peaked.
Fed member Kashkari stated a few hours ago that “its very clear we need to tighten monetary policy”. This remark has strengthened risk-off sentiment in markets.Yesterday saw another strong advance by the US Dollar Index to a new multi-year high, with technical breakdowns were especially notable in the EUR/USD and GBP/USD currency pairs which both reached new multi-year low prices. However, there are early signs that the US Dollar Index may have peaked for now, with new lower resistance suggested at 108.50. Nevertheless, there is a long-term bullish trend in the US Dollar which should not yet be discounted.Global stock markets have declined again over the past day as fearful sentiment grows regarding the Federal Reserve’s monetary policy, although it is worth remembering that the US stock market is in a bear market anyway. The S&P 500 Index and the NASDAQ 100 Index both ended the day down, as did the European DAX. Asian indices also lost ground during the Tokyo session.In the Forex market, the Euro and the British Pound are the weakest major currencies, while the US Dollar is the strongest.Natural Gas futures reached a new record high yesterday but sold off quite sharply before the close.Manufacturing and Services PMI survey results yesterday for the USA, the UK, Germany, and France were mixed but skewed towards undershooting expectations, suggesting consumer demand is dropping off.There are no major data releases scheduled today, but tomorrow will see major events with the release of US Preliminary GDP data and the first day of the Jackson Hole Symposium of central bankers.Daily new coronavirus cases globally dropped last week for the fifth consecutive week.It is estimated that 67.5% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 7.6% of the global population is confirmed to have contracted the virus at some time, although the true number is highly likely to be much larger. Total confirmed new coronavirus cases worldwide stand at over 602.5 million with an average case fatality rate of 1.07%. The rate of new coronavirus infections appears to now be most significantly increasing in Japan, South Korea, The Marshall Islands, Moldova, and Tonga.
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