What you need to take care of on Friday, August 19:
The greenback strengthened during US trading hours, soaring across the FX board. Market players assessed several encouraging US macroeconomic figures that suggest the economy has a good chance of skipping a recession, despite technically on it.
Investors changed their minds regarding the latest Federal Reserve announcement. The Minutes from the latest FOMC Meeting published on Wednesday were initially seen as dovish, particularly considering policymakers expressed their concerns about the risk of raising the rate benchmark to a level it would become more a problem than a solution.
Nevertheless, the latest US figures hint at a much better situation than initially feared. Inflation has finally begun easing while the employment sector remains solid. Additionally, other indicators related to business activity have surprised to the upside.
US Federal Reserve officials were on the wires with a mixed message. Minneapolis Federal Reserve Neel Kashkari said that if they keep raising rates, the risk of a recession could increase, although he does not believe the county is currently in a recession. On the other hand, the usual hawk, Bank of St. Louis Jim Bullard said he is leaning towards another 75 bps rate hike in September.
The EUR/USD pair plunged below the 1.0100 mark and trades near a daily low of 1.0078. GBP/USD, in the meantime, trades around 1.1930.
Safe-haven rivals are ending Thursday near their intraday lows against the dollar, with USD/CHF at around 0.9560, while USD/JPY trades at 135.95.
The AUD/USD pair trades around 0.6910/20, with the aussie additionally weighed by dismal Australian employment figures. USD/CAD stands at 1.2940, as Canadian Industrial Production unexpectedly contracted in July.
The broad dollar's strength pushed gold to a fresh weekly low of $1,755.30 a troy ounce. Crude oil prices, on the other hand, recovered their bullish poise, and the barrel of WTI currently stands at around $90.50 a barrel.
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EUR/USD treads water just above 1.0400 post-US data
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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