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Markets evaluated rate-hike expectations after central banks committed to tackle inflation


US stocks declined on Thursday, as traders recalibrated rate-hike expectations after central banks across the globe vowed to step up their fights against inflation. Federal Reserve officials in recent days quashed hopes of a dovish pivot, a view that had helped fuel bets that this year’s bear market is over. Since then, investors have been sifting through sometimes conflicting economic data for further policy clues. While job openings data on Tuesday underscored tightness in the labour market, revamped ADP data on Wednesday showed US companies increased headcount at a relatively sluggish pace in August. All eyes will be on the job report on Friday for further hints about the central bank’s path.

The S&P500 and Dow Jone Industrial Average benchmarks slid on Wednesday, as all major indices had their worst month since June. Ten out of eleven sectors in S&P500 stayed in negative territory, as Material performed the worst among all groups, dropping with a 1.21% loss on daily basis. The Dow Jone Industrial Average fell 0.9%, the Nasdaq100 slipped by 0.6%, and the MSCI world index decreased by 0.8% on the last day of August.

Main Pairs Movement

The US dollar was little changed on Wednesday, as European Central Bank members have joined the fight to combat inflation, also expressing strong determination at the Jackson Hole symposium. The DXY index witnessed new transactions and touched a daily high level above 109.2 during the early UK trading session, then weighted by heavy selling pressure and fell to a daily low level below 108.4 at the beginning of the US session.

The GBP/USD slipped with a 0.29% loss on daily basis for the day, as strong US greenback across the board. The cables stably climbed to a daily high level above 1.169 in the middle of the Asia session, then tumbled and oscillated in a big range from 1.160 to 1.165 during the US session. Meantime, EUR/USD surged to a daily high level above 1.007, as hawkish central bankers. The pair advanced by 0.39% daily basis for the day.

Gold plunged with a 0.75% loss on Wednesday, as aggressive Federal Reserve bets. XAU/USD extended its weakness on the last day in August, while the yellow metal displayed a pullback during the UK trading session, then weighted by downside traction to keep falling to a month-low below $1,710 marks.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
CNYCaixin Manufacturing PMI (Aug)09:4550.2
EURGerman Manufacturing PMI (Aug)15:5549.8
GBPManufacturing PMI (Aug)16:3046.0
USDInitial Jobless Claims20:30248K
USDISM Manufacturing PMI (Aug)22:0052.0