Interest Rates will keep Increased, US stocks declined

　　

US stocks declined on Monday, as a realization that interest rates are likely to remain elevated for an extended period continued to force a repricing across assets. Powell’s speech during the Jackson Hole symposium underscored that expectations for any reversal of Fed tightening next year were unlikely unless inflation reverted toward the central bank’s long-term target. The latest consumer price reading in the US put inflation above 8%, which is far away from the target, of 2%. Fed chairs also warned of the potential for economic pain for households and businesses as the central bank continues to be aggressive.

The benchmarks, both S&P500 and Dow Jones Industrial Average slid a second day, adding to the rout that started Friday when Jerome Powell made it clear the Fed is willing to let the economy suffer as it fights inflation. Nine out of eleven sectors in the S&P500 stayed in negative territory, as Information Technology got the worst performance among all groups, dropping 1.28% for the day. While the Energy sector surged with a 1.54% gain on daily basis. The Nasdaq 100 fell 1%, Dow Jones Industrial Average slipped 0.6%, and the MSCI world index fell 2.3% on Monday.

Main Pairs Movement:

The US dollar was little changed down on Monday. The DXY index extended upbeat tractions lifted by Federal Reserve Chair Jerome Powell’s hawkish comments and refreshed a 20-year high level above 109.4 in the first half of Monday. Then, as the expectations for the England Central Bank rate hiked, the US greenback was kept in check and dropped to a level below 108.6 during the UK trading session.

The GBP/USD declined with a 0.30% loss daily for the day, as investors are awaiting ISM’s national manufacturing reading and US Nonfarm Payroll for August, which are released on Thursday and Friday respectively.  The cables extended bearish momentum caused by Powell’s hawkish comment and fell to a level below 1.166, then rebounded to a daily high level above 1.174. Meanwhile, EUR/USD surged to a nearly 1.003 level as ECB rate hiking expectations. The pair advanced by 0.31% on Monday.

The gold was little changed down for the day, as market participants reflected on the Jackson Hole symposium. XAU/USD plunged to a level below $1,722 marks at the beginning of the Asia trading session, then witnessed fresh transactions during the middle of the UK trading session and touched a daily high above $1,745 marks. The yellow metal is going to brace for the period of high volatility, with incoming data that could reignite fears of a worldwide recession.

Economic Data

Currency	Data	Time (GMT + 8)	Forecast
USD	CB Consumer Confidence (Aug)	22:00	97.9
USD	JOLTs Job Openings (Jul)	22:00	10.475M