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The sentiment in foreign exchange markets was quite mixed besides the clear weakness of the US dollar at the beginning of the week, which allowed even the GBP/USD pair to recover after the confrontation with the EU about details regarding the withdrawal agreement crushed the pound sterling last week.One of the most consistently improving currencies over the past weeks was the Mexican peso (MXN) with the USD/MXN pair now trading marginally above 21.0, which marks the lowest level in six months. The strong euro might have been one factor that prevented multiple European stock market indices from following the positive performance of the US indices on Monday.Precious metals such as gold and platinum, but also cryptocurrencies like Bitcoin and Ethereum improved in valuation over the past trading day.On Tuesday weekly data from the API will be presented. Also monthly statistics for August on industrial production and capacity utilization, as well as the Empire State General Business Conditions survey will be released.
As the US dollar again weakened, the EUR/USD pair was briefly even able to trade at 1.19 and closing on Monday for the fourth trading day in a row in the green.European industrial production data was for July slightly better than expected, improving by 4.1 per cent on a monthly basis.French Inflation (CPI) data released in the morning hours was as expected rather low with only 0.2 per cent annualized inflation, way below the target of around two per cent set by the central bank.On Tuesday the German ZEW Survey results will be released. Later from the US data on import and export prices, business conditions as well as industrial production can be expected.
Gold prices noticeably improved on Monday and further rose by Tuesday morning, reaching a new two-weeks high. Other precious metals like silver also traded higher, while platinum prices broke out higher after rising steadily for more than a week.Analysts are keenly awaiting for more indications on the future of the central bank’s monetary policies at the FOMC meeting that will end on Wednesday. At the annual Jackson Hole meeting of central bankers the Federal Reserve indicated a significant shift in its inflation targeting policies, which would not just target a specific amount of inflation but rather an averaged inflation over the years, which could mean higher inflation to offset the recent years of quite low inflation, especially when interest rates were close to zero.
Oil prices closed almost unchanged, just slightly down from Friday’s closing prices despite indications in the stock markets for a possible recovery and a weaker US dollar, making crude oil purchases cheaper in other currencies. The key news driving the oil markets could have been the report that the warring factions in Libya agreed that the oil blockade would be lifted, which could bring up to 1.2 million barrels of oil to the already saturated markets.On Tuesday the American Petroleum Institute (API) is publishing its Weekly Statistical Bulletin, which will include weekly data on crude oil stockpiles. Then on Wednesday the Energy Information Administration (EIA) follows with its weekly datasets on crude oil, gasoline and distillate inventories.
Key US stock indices, such as the US 500 or the US Tech 100 closed higher on Monday, starting slowly to recover from the steep drop in valuations last week. Apple’s (+2.99%) strong performance just ahead of the much-anticipated potential unveiling of new products at a conference scheduled for Tuesday helped also push these indices higher, given that this is the single stock with the highest weight in the index and also the most valuable company by market capitalization in the world.Some of the best performing stocks on Monday were the biotech companies Inovio (+12.10%) and Novavax (+11.26%). Tesla (+12.67%) shares were however even outperforming those two, with investors apparently seeing now the recent plunge in stock prices as a buying opportunity. While many analysts still believe that at current market prices the company is still overvalued, some are adjusting price targets closer towards the current price range. Analysts from UBS significantly increased their price target from $160 per stock over expectations that new battery technology, which Tesla is due to show the public on the September 22 could improve the company’s sales in the years to come.On Tuesday Adobe and FedEx will release their quarterly results.
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