Euro trades near six-month low ahead of major European data
Euro fell in European trade on Friday against a basket of major rivals, extending losses for the fourth straight session against US dollar and almost touching six-month lows amid growing concerns about the widening Europe-US policy gap.
Later, important European data will be released for September, and will provide important clues on the health of the euro zone economy.
EUR/USD fell 0.2% to 1.0640, with a session-high at 1.0663, after losing 0.1% yesterday, the third loss in a row, plumbing a six-month trough at 1.0617 following a spate of US data.
Interest Rate Gap
The current interest rate gap between Europe and the US shrank to just 100 basis points, the lowest since May 2022, however it could rise again to 125 basis points in November.
Analysts now expect the European Central Bank to pause raising rates in November after effectively reaching neutral levels in September.
However, the Federal Reserve is expected to raise interest rates by 25 basis points at the November meeting after pausing rate hikes at the September meeting.
Major Sectors
Now investors await a slew of important European data for September on the manufacturing and services sectors, which will impact euro's standing considerably.
Gold prices fall over 1% as US yields rebound
Gold prices fell on Thursday as the dollar gained ground against most major rivals with US treasury yields rebounding strongly while markets assess the Federal Reserve's latest policy statement.
US treasury yields spiked to 15-year highs after bullish signals by the Fed, pressuring stocks.
Yesterday, the Fed held interest rates unchanged at 5.5%, the highest in 22 years, but hinted strongly at a hike in November.
As for data, unemployment claims fell 20 thousand to 201 thousand last week.
Otherwise, the dollar index rose 0.2% as of 17:57 GMT to 105.3, with a session-high at 105.7, and a low at 105.2.
On trading, gold spot prices fell 1.4%, or $27.5 as of 17:58 GMT to $1,939.6 an ounce.
What's the impact of the automotive strikes on US steel industry?
The monthly crude metals index MMI is trading sideways this month after a 2.83% drop in August, with steel prices falling all across the board.
Steel prices tumbled 10.3% this month, plumbing January 2023 lows and heading towards $600 a tonne.
Recently, automotive workers launched strikes against Ford, GM, Stellantis after the collapse of wage negotiations.
The strikes started with 13 thousand workers and could very well last a long time, potentially three months, in turn leading to a loss of 400 thousand tonnes of steel demand, alongside a drop of 550 thousand cars a month of lost production.
The first company that took heavy losses is US Steel company with its B steel furnaces idled due to weaker demand.
In several major US Steel furnaces, it's estimated the capacity has fallen to 75% or so, and is expected to collapse across the board as the strikes carry on.
Historic Labor Strikes
The UAW union has launched a strike for the first time ever against all three major automotive companies, following a single extended strike against GM for about a month in October in 50 factories, which similarly hurt steel prices considerably.
The length and width of such automotive strikes have a history of negative impact on many industries ans chief of which the steel industry, however a quick resolution of the strikes is expected to easily boost steel prices and production once more.
However, the current situation does look bleaker than usual, and could easily extend for six weeks or more, in turn dragging steel prices and production heavily down, not just in the US but worldwide.
Wall Street declines to one-month low as US yields increase
US stock indices fell on Thursday to one-month lows as US treasury yields rose once more while investors continue to assess the Federal Reserve's policy statements.
US treasury yields spiked to 15-year highs after bullish signals by the Fed, pressuring stocks.
Yesterday, the Fed held interest rates unchanged at 5.5%, the highest in 22 years, but hinted strongly at a hike in November.
As for data, unemployment claims fell 20 thousand to 201 thousand last week.
On trading, Dow Jones fell 0.5%, or 190 points to 34,250, while S&P 500 fell 1.1%, or 47 points to 4355, as NASDAQ declined 1.2%, or 166 points to 13,302.