What you need to take care of on Tuesday, August 23:
Risk aversion took over financial markets at the beginning of the week amid recession fears hitting European shores. Gas prices soared in the region to new record highs as Russia announced unscheduled maintenance on the Nord Stream 1 pipeline, announcing it will shut it down for three days starting August 31.
European stocks collapsed, with the German DAX suffering the most. Also, the German Bundesbank released its monthly report, which noted that a recession in Germany is increasingly likely, and that could inflation will continue to accelerate and could peak at more than 10%.
The EUR/USD pair collapsed to a fresh 22-year low of 0.9925, holding nearby early in the Asian session. GBP/USD fell to its lowest since March 2020, trading at around 1.1760. Commodity-linked currencies were also down, with AUD/USD trading at the lower end of its August range in the 0.6870 area and the USD/CAD pair reaching a one-month high of 1.3060.
The greenback appreciated against its safe-haven rivals, with USD/CHF trading at 0.9640 and USD/JPY 137.40. Gold trades at around $1,737 a troy ounce.
Crude oil prices fell sharply ahead of the US opening, recovering afterwards. WTI traded as low as $86.28 a barrel to settle at around $90.60. Saudi Energy Minister said that OPEC+ might need to tighten output to stabilise the market.
Wall Street plunged and had its worst day since mid-June. US indexes lost roughly 2% each. US Treasury yields edged north, with that on the 10-year note currently at 3.03%.
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Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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