Euro extends losses after ECB bearish remarks
Euro fell in European trade against a basket of major rivals, extending losses for the third straight session against dollar away from six-month highs on profit-taking, following somewhat bearish remarks by ECB officials, which cut chances of a 0.75% rate hike.
Dollar continues to recoup on haven demand amid mounting concerns about US recession in 2023 following warnings from several major Wall Street bankers.
EUR/USD fell 0.2% to 1.0443, after closing down 0.25% yesterday, the second loss in a row on profit-taking off six-month highs at 1.0595.
European Rates
ECB officials noted today that inflation and interest rates could be near peak values, ahead of the ECB official meeting next week.
Such statements cut chances of a European rate hike of 75 basis points this month, and boosted chances of a 0.5% rate hike only.
The Dollar
The dollar index rose over 0.2% today for the third straight session against a basket of major rivals off six-month lows.
Such recovery come amid haven demand after several Wall Street bankers warned from recession risks next year.
CEOs of JPMorgan, Bank of America, and Goldman Sachs warned that inflation will threaten consumer demand, and that banks are preparing for deteriorating conditions in 2023.
Wall Street declines amid uncertainty about interest rates
US stock indices declined on Tuesday amid uncertainty about the Federal Reserve's monetary policies.
It comes after US payrolls data showed increased growth in the labor market, which feeds inflation.
Such data sparked questions about whether the Fed will continue the current brisk pace of policy tightening.
Dow Jones fell 0.2%, or 72 points to 33,875 as of 15:00 GMT, while S&P 500 fell 0.6%, or 24 points to 3,975, as NASDAQ fell 1.1% to 121 points to 11,118.
Dollar extends recovery after strong data
Dollar rose in European trade against a basket of major rivals, recouping for the second day from six-month lows.
Recent strong US data underpinned chances of a 0.75% rate hike once more next week when the Federal Reserve officially convenes.
The Index
The dollar index rose 0.3% to 105.50, with a session-low at 105.02, after closing up 0.75% yesterday, the first profit in four days away from six-month lows at 104.11.
Services
Recent US data showed US services PMI rose unexpectedly last month, showing the services sector remains vibrant.
US Services PMI rose to 56.5 from 54.4 in the previous reading, easily beating estimates of 53.5.
Such data raised chances of a 0.75% rate hike by the Federal Reserve from 18% to 22% next week.
Fed's Meeting
The Federal Reserve is meeting next week to study economic developments and decide on policies, with the Fed expected to hike rates for the seventh meeting in a row.
Gold resumes gains after marking heftiest loss in 3 months
Gold prices rose in European trade after a two-day hiatus, and after marking the heftiest daily loss in three months on active profit-taking while dollar strengthened following strong US services data.
However most analysts still expect the Fed to increase interest rates by 50 basis points only next week, which will underpin gold.
Gold Prices Today
Gold prices rose over 0.4% to $1,776 an ounce, after losing 1.6% yesterday, the second loss in a row, and the largest since September on profit-taking away from five-month highs at $1,810.
US Services
Recent US data showed US services PMI rose unexpectedly last month, showing the services sector remains vibrant.
US Services PMI rose to 56.5 from 54.4 in the previous reading, easily beating estimates of 53.5.
Such data raised chances of a 0.75% rate hike by the Federal Reserve from 18% to 22% next week.
Fed's Meeting
The Federal Reserve is meeting next week to study economic developments and decide on policies, with the Fed expected to hike rates for the seventh meeting in a row.
The SPDR
Gold holdings at the SPDR Gold Trust fell 2.03 tones on Friday, the third decline in a row to a total of 903.46 tones, the lowest since January 2020.