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Forecast: 236K (Previous: 235K)
The US Department of Labor’s weekly release of Initial Jobless Claims could show us a sign of how healthy the US labor market is. A higher-than-expected number could indicate that more people are filing for unemployment benefits, which may be a sign of weakness in the labor market. This would typically be bearish for the US Dollar (USD). On the other hand, a decrease in claims would signal strength in the economy and could support a bullish outlook for the USD.
While the weekly numbers can be volatile, traders often focus on the four-week average to smooth out any short-term fluctuations.
Previous: 2.2%Canada’s GDP for Q2 will be released soon, with a previous reading of 2.2%. The GDP number is crucial because it gives us a snapshot of Canada’s overall economic activity. A strong GDP growth rate is typically bullish for the Canadian Dollar (CAD), as it suggests a healthy economy and potentially higher interest rates down the line. Conversely, weaker-than-expected GDP could weigh on the CAD.
The Reserve Bank of Australia (RBA) is publishing the minutes of its last monetary policy meeting. This document gives traders a detailed look into the RBA’s thinking, including discussions on economic conditions and inflationary pressures. If the minutes indicate that the RBA is leaning toward tightening policy (i.e., raising rates), this would be seen as bullish for the Australian Dollar (AUD). Conversely, if the minutes suggest a more dovish outlook, the AUD could face downward pressure.
Forecast: 2.1% (Previous: 2%)Germany’s Consumer Price Index (CPI) for August will also be released. CPI measures inflation at the consumer level and is one of the most important economic indicators. A higher-than-expected CPI could point to rising inflationary pressures in the Eurozone, which could lead to more hawkish policies from the ECB. This would be supportive of the Euro (EUR), whereas a lower CPI reading could put downward pressure on the Euro as it may suggest weaker inflationary trends.
Gold prices experienced a slight pullback in Asian trade on Monday, following a sharp rally last Friday triggered by dovish comments from Federal Reserve Chair Jerome Powell. Despite Powell signaling the possibility of interest rate cuts in September due to signs of a cooling labor market, the yellow metal faced pressure as investors flocked to risk-driven assets, speculating on a more favorable economic environment.
Spot gold fell by 0.2% to $3,363.88 an ounce, while gold futures declined by 0.3%, settling at $3,408.0 per ounce. Last Friday, gold had rallied approximately 1%, bolstered by the Fed Chair's remarks. However, these gains quickly evaporated as investor sentiment turned towards more high-risk, high-reward assets, particularly stocks, with Wall Street seeing a strong rally and Asian markets continuing the bullish momentum on Monday.
While gold and other metals initially benefitted from a weaker U.S. Dollar due to Powell's comments, the broader shift towards risk assets reduced the demand for havens. Investors seem increasingly confident that the Federal Reserve will opt for interest rate cuts, with Fed fund futures pricing in an 84.1% probability of a cut in September, up from 70% the previous week. This dovish sentiment bodes well for commodities priced in dollars.
However, the strong risk-on rally quickly overshadowed these positive fundamentals for gold and other precious metals. Among other metals, platinum dropped by 0.4% to $1,359.11/oz, and silver saw a slight decrease of 0.1%, settling at $38.83/oz.
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