08/08/2024 Daily Reports
Oil steadied after its biggest advance in a week, with the market on edge over a possible retaliatory strike by Iran on Israel as payback for assassinations of Hamas and Hezbollah leaders. Brent futures traded near $79 a barrel after rising 2.4% on Wednesday, while West Texas Intermediate was above $75. Israel continues to brace for an attack, although comments from Iran’s president during a phone call with his French counterpart hinted at a diplomatic path to de-escalation. Oil has rebounded after falling to a seven-month low on Monday amid a rout in global equity markets. A halt to crude production from Libya’s biggest field has helped underpin the gains, while a rare cross-border attack by Ukrainian troops into Russia added to geopolitical tensions. Official data out of the US on Wednesday showed crude stockpiles fell for a sixth week to their lowest since February. That may alleviate some of the concerns about faltering demand in the biggest consumer, but there were builds at the key Cushing storage hub and in gasoline.
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- Gold prices rose to around $2,390 per ounce on Thursday, recovering from previous session losses due to expectations of US interest rate cuts and ongoing evaluation of recession risks. The weak US jobs report has increased speculation of nearly 105 basis points in rate cuts by the Federal Reserve by the end of the year, with markets fully pricing in a cut in September, according to the CME FedWatch Tool. Lower interest rates make non-interest-bearing assets like gold more attractive, bolstering its appeal.
- Investors are now looking ahead to Thursday’s jobless claims to see if economic data, especially employment figures, continues to show signs of slowing. Additionally, geopolitical tensions in the Middle East are providing further support for gold prices. Meanwhile, official data from Wednesday revealed that the People’s Bank of China did not add to its gold reserves for the third consecutive month in July, highlighting a pause in their bullion accumulation strategy.
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Japanese Yen Strengthens: USDJPY fell 0.2% to 146.36 yen. Despite recent volatility and mixed BOJ signals, the yen has shown a strong recovery over the past month. BOJ members released on Thursday showed several policymakers were in favor of raising interest rates further, and that they saw rates reaching a neutral level with the economy at 1%- implying an at least 75 basis point upside from current levels.
Australian Dollar Surges: The AUDUSD pair jumped 0.7% after RBA Governor Michele Bullock hinted at potential rate hikes to combat inflation. Traders priced in this possibility, boosting the Aussie.
U.S. Markets Dip: Despite early recovery attempts, U.S. markets closed lower. Nasdaq lagged behind S&P 500 and Dow Jones due to weak 10-year Treasury bond demand.
The dollar index and dollar index futures both fell 0.2% in Asian trade.
