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The dollar continued to strengthen its position against other major and emerging market currencies. The USD/CNH pair continued to push higher towards yet another two-years high, the USD/INR pair was again up at around the 80.0 level and the USD/TRY pair reached again a new year-to-date high and is now very close to its previous all-time high.
Sentiment in the crypto markets was overall negative after a brief consolidation on Monday Bitcoin was again below $19k and Ethereum retraced towards lower $1,300-levels.
By Wednesday morning the euro significantly weakened against other major currencies and European indices like the Germany 40 and Europe 50 noticeably declined, while U.S. markets suffered only minor losses. This comes as the President of Russia released a pre-recorded speech, where a partial military mobilisation was announced and could further escalate the conflict.
On Wednesday in the U.S. existing home sales data and the Mortgage Bankers' Association (MB A) weekly market indicators will be published. In the Asian-Pacific trading session New Zealand trade balance data will be published and the Bank of Japan announces its monetary policy decision.
The EUR/USD pair dropped below 0.99 by Wednesday morning just as the pre-recorded speech by the Russian President started airing which could lead to further escalations in the ongoing conflict. U.S. data on housing starts in August was quite better than anticipated at 1.575 million (previous 1.446 million) in August, though new permits were down on a monthly basis from 1.674 million to 1.517 million.
One of the most watched events this week will be the monetary policy decision by the FOMC on Wednesday as it is widely believed that the Fed will raise rates by 75 basis points. Though there remains a lot of uncertainty as the monetary policy makers might also face some pressure and difficulty coming up with an approach that could satisfy all stakeholders, given that not only is the rate of inflation still way above target levels, but at this time the economic activity also seems to be slowing down.
Gold prices remained well within the range seen over the past week despite a strengthening dollar and increasing yields such as the 10-year U.S. T-Note benchmark yield crossing above the 3.5% level. In theory both these developments could be reflected in lower gold prices as a strong dollar makes the precious metal relatively more expensive in other currencies, while a high yield on assets that are also perceived to be 'safe havens' in turn increases the opportunity costs of holding non-yielding assets like gold.
Silver prices seemed to move in positive correlation to that of gold after a some divergence was seen last week. Platinum prices meanwhile continued heading higher, reaching a new one month high.
Oil strongly rebounded by Wednesday morning and reversed all the losses from the beginning of the week following the airing of the speech of the Russian President announcing a partial mobilisation following an Ukrainian offensive over the past weeks that was seen as successful in pushing back the Russian side.
Oil prices were almost unchanged by Tuesday evening on the data published by the American Petroleum Institute (API) in the evening hours in its Weekly Statistical Bulletin which showed increased inventories across the board with crude oil stockpiles up by 1.0 million barrels, while gasoline and distillate inventories were up by 3.2 million barrels and 1.5 million barrels respectively. On Wednesday the Energy Information Administration (EIA) also publishes its weekly statistics, which include data on stockpiles of these energy commodities.
Major stock market indices like the US 500 and US 30 index traded lower on Tuesday and further declining by Wednesday morning, undoing all the progress made on Monday and bringing the weekly chart candlestick for now into the red.
Ford (-12.39%) was by far the worst-performing S&P 500 index component on Tuesday with the losses for stockholders widening compared to after hours on Monday when the company announced that supply chain expenses increased by a billion dollars in the quarter, while maintaining its earnings guidance for Q4.
While Moderna (+1.15%) and BioNTech (+0.05%) stabilised after the steep losses on Monday, Novavax (-3.03%) shares continued heading lower, reaching a new low since May 2020. This development comes despite mostly positive news coming out during this month such as the European Medicines Agency (EMA) approving the company's COVID vaccine to be used as a booster, while in Israel the vaccine was approved for individuals aged 12 and older as either primary or booster vaccine.
A relatively limited number of quarterly results are coming in towards the end of the week when on Thursday Accenture and Costco are publishing their respective numbers.
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