iFOREX Daily Analysis : August 24, 2016
iFOREX | Aug 24, 2016 05:36AM ET
The dollar gained against most currencies on Tuesday after data showing that new U.S. single-family home sales unexpectedly rose in July, reaching their highest level in nearly nine years as demand increased broadly, brightening the housing market outlook. At the end of the week, Fed Chair Janet Yellen is scheduled to address the central bankers gathered for the annual Jackson Hole meeting that begins on Thursday. The meeting will be closely watched for fresh signals on the U.S. monetary policy outlook. Recent hawkish comments from important Fed members have raised investors' expectations that Yellen might also take an aggressive tone. The euro was flat on Tuesday despite data showing surprisingly strong growth in France, as Germany’s manufacturing purchasing managers’ index slipped to a two-month low of 53.6 in August from 53.8 the previous month. For today, the U.S. is to produce a report on existing home sales as well as weekly data on oil supplies.
EUR/USD
The euro fluctuated between gains and losses and finally ended Tuesday by almost 0.13% lower against the dollar, pressured by weak manufacturing and services data from Germany, while the dollar on the other hand was supported by a solid report from the U.S. housing sector. Investors are now becoming more cautious ahead of Friday’s speech by Federal Reserve Chair Janet Yellen. Market participants are hoping that Yellen will give further indications on the timing of future rate hikes.
Gold
Gold prices ended Tuesday’s session with a slight increase, despite positive housing data from the U.S., as investors appear cautious now shifting their attention to a highly anticipated speech by Federal Reserve President Janet Yellen as well as on growth data from the U.S. due on Friday. On Monday, the yellow metal dropped to a two-week low of $1,335.40 amid indications the Federal Reserve could raise interest rates as early as next month following hawkish comments from several Fed officials. Yellen may provide fresh clues on the timing of the next U.S. rate hike at a speech during an annual meeting of central bankers in Jackson Hole, Wyoming, on Friday. The annual Fed symposium has sometimes been used by Fed chairs to make important policy statements.
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WTI Oil
On Tuesday, oil prices recovered from Monday’s sharp drop, despite a surprise build in U.S. inventories after Reuters reported Iran was sending positive signals that it may support joint OPEC action to support the market. Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries, refused to join a previous attempt this year by the group and non-OPEC members led by Russia to stabilize production. But sources in OPEC and the oil industry told Reuters that Tehran appeared more willing to support such talks scheduled next month in Algeria. The American Petroleum Institute reported a 4.46 million-barrel rise in U.S. crude supplies for the week ended Aug. 19, sources said. Today’s Energy Information administration report on inventories will be in focus.
US 500
The main U.S. indices were higher on Tuesday, as gains in Housing, Basic Materials, Oil & Gas and Technology sectors led shares higher. At the close in NYSE, the Dow Jones Industrial Average added 0.10%, while the S&P 500 index climbed 0.20%, and the NASDAQ Composite index added 0.30%. The top performer on the S&P 500 was Best Buy Co Inc (NYSE:BBY) which rose 19.51% providing significant support to the index. Gains in the tech sector helped push the Nasdaq to a record intraday high and solid housing market data provided more evidence the economy may be picking up momentum. With the U.S. earnings season winding down, investors are also turning their focus to the likelihood of an interest rate hike in the coming months.
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