While optimism revived slightly in the US economy, the US dollar and stock markets made small but fragile gains.
➡️ In yesterday's quiet day in the market, there was a natural bounce from last week's pessimism about the Fed's delay in cutting rates and the prospect of a recession hitting the US economy. Major US stock indices posted gains and the US dollar strengthened, while US Treasury yields rose slightly. However, these developments seem very fragile and prone to a reversal in the direction of long-term trends.
➡️ In the Forex market, the New Zealand dollar was the strongest major currency since the Tokyo open today, while the Japanese yen was the weakest, although the movements are so small that they are probably not significant. There is a valid long-term trend against the US dollar in the USD/JPY currency pair, but the EUR/USD currency pair has fallen more than 3 times the average true range of the long-term daily chart, indicating that it is probably time for the bulls to give up.
➡️ US Treasury Secretary Janet Yellen said over the weekend that she sees “no red lights flashing” on the US economy. It is clear that he is trying to ward off growing inflation pessimism, and that may have worked a little yesterday, but it will be put to the test today.
➡️ New fears are emerging that China could fall into a deflationary spiral, which could seriously damage the global economy given China's large economy and its role as a producer and importer of raw materials for the world.. China is seeing a flood of data pointing to weak consumer and investment demand, and its stock market has fallen over the summer.
➡️ Tomorrow will see the release of US CPI (inflation) data, which will be important for the market. Annualized inflation is expected to decline from 2.9% to 2.6%.
➡️ Most commodities, especially soft ones, look weak. However, They remains relatively bullish, as it is trading only about 1 day's average range below its all-time high above $ 2,500.
➡️ Today, data on changes in the U.S. claimant count (unemployment claims) will be released, and the Governor of the Bank of Canada will give a short speech.
Credit by DailyForex.com
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