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Despite the recovery of the dollar against other major currencies as seen in the performance of the USDX, in emerging markets the trend seemed to be mostly unchanged. The USD/MXN and USD/ZAR pairs continued pushing lower, while the USD/TRY remained close to the previous all-time high around 7.50. The Turkish currency remained under pressure following the downgrade in the sovereign debt rating from rating agency Moody’s which is now rating Turkey only at ‘B2’, indicating increased external vulnerabilities and declining fiscal buffers as reasons for its decision.Gold prices settled lower on Tuesday after reaching a new two weeks high. Meanwhile platinum prices continued to push higher at a fast speed trading now at a new one month high. Oil prices also noticeably recovered since the beginning of the trading session on Tuesday helped by reports of declining oil stockpiles in the US and strong demand from China.The majority of European and US equity index futures opened higher on Wednesday morning ahead of the FOMC announcement. However some Asian markets like china and South Korea were under pressure at the same time. On Wednesday inflation data will be published in the UK and Canada. For Europe trade balance statistics can be expected and in the US data on retail sales, business inventories and the Housing Market Index will be published. Later in the Asian-Pacific trading session data the New Zealand GDP for Q2 and employment statistics from Australia can be expected. Also the Bank of Japan (BoJ) will announce its interest rate decision.
With the dollar recovering over the course of the trading session on Tuesday, the EUR/USD ended the day lower for the first time in five trading days. Economic fundamentals were rather mixed, with import prices rising in August (+0.9%) faster than export prices (+0.5%) and industrial production levels making only small advances in August at +0.4% m/m (expected +1.2%). On the other hand, the Empire State General Business Conditions survey further improved from 3.7 to 17.0.The key event on Wednesday could be the monetary policy announcement from the FOMC after the end of the meeting later on Wednesday. Besides further clarification regarding the new inflation rate targeting by the central banking institution, some analysts expect to hear more comments about the negative potential if lawmakers continue avoiding taking fiscal action during these difficult times.
Despite some losses later in the trading session on Tuesday, the Germany 30 index managed to close in the green.While the market sentiment remains mixed, it should be pointed out that the stock price of the two German premium car manufacturers BWM and Daimler is trading by now at the level previously seen in early February, before the pandemic affected the markets. Other European car makers like Renault or Fiat Chrysler are clearly lagging behind in that sense. However, Fiat Chrysler is starting to recover at a fast pace with the stock price up by more than nine per cent on Tuesday, following changes to the merger deal with Peugeot SA.The results of the German ZEW survey on current conditions and business expectations were overall better than expected, with business expectations further improving from 71.5 to 77.4.On Wednesday the OECD and the IWH will publish their economic growth estimates. Also on Wednesday European trade balance data can be expected.
Oil prices pushed significantly higher on Tuesday, with the positive momentum remaining by Wednesday morning.Reports about sizable production outages in the Gulf Coast of the US due to Hurricane Sally, as well as reports that China’s demand for crude oil remained strong even compared to the previous year could have helped oil prices push to the upside. Also, the significant weekly draw from crude oil inventories reaching 9.5 million barrels according to data from the American Petroleum Institute (API) could have helped improve the market sentiment.On the downside however, the monthly report by the IEA indicated that demand for the whole of 2020 would fall by 8.4 million barrels per day, which is more than the previously expected decline of 8.4 million barrels.Then on Wednesday the Energy Information Administration (EIA) publishes its weekly crude oil, gasoline and distillate stockpiles statistics.
While the US 30 index closed almost unchanged, the tech-focused US TECH 100 index continued pushing higher. Tesla (+7.47%) shares continued surging higher, by now trading again above the level just after the stock-split a bit more than two weeks ago.Apple stocks were under pressure in after-hours trading. During the much anticipated event on Tuesday Apple mostly focused on new releases for the iPad, Apple Watch as well as subscription services. As some analysts predicted the company failed to announce a new iPhone. Reports indicate that Apple is facing still manufacturing issues due to the slower restart of companies than expected and could release the new iPhone version later this year.By some estimates the IPO of the cloud database company Snowflake could be the biggest IPO in the software market of all times. At the initial set price per share of $120 the company could be valued at least at $33 billion.
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