US Dollar Falls as Forex Investors Wait for Inflation Data

Aug. 8, 2022

The US dollar lost steam Monday morning as investors await Wednesday’s inflation report. The dollar index fell to 106.31, a 0.3% drop from Friday’s 106.930. 

Dollar

Investors are now betting that the Fed has a 69% chance of raising rates by 75 basis points in September.

Although inflation concerns plague American consumers and investors, the US dollar has held up well against other currencies due to the Fed’s “hawkish” monetary policy in 2022. 

Many leading currencies, like the yen and euro, struggle to gain value against the dollar. The Japanese central bank has been viewed as dovish in its approach to curbing inflation rates. The USD/JPY is currently at a two-month low, at 130.40.

Gold has reacted positively to a weaker dollar Monday morning. Gold prices jumped 0.48% to $1,795.50 per ounce. Silver jumped 2.91% to $20.72 per ounce. Platinum increased 0.65% to $963.40 per ounce, while Palladium rose 5.23% to $2,292.00 per ounce. Bitcoin climbed 4.22% to $24,156.20.

Nonfarm Payrolls Grew 528,000 in July, More than Expected

Aug. 5, 2022

The Bureau of Labor Statistics reported on Friday that nonfarm payrolls rose 528,000 in July, beating out the Dow Jones expected estimates of 258,000. The unemployment rate was recorded at 3.5% for the same period.

BLS

Wage growth also jumped, as average hourly earnings surged 0.5% month-over-month (MoM) and 5.2% year-over-year (YoY), also higher than estimates.

As a result of the better-than-expected jobs report, it is expected that the Federal Reserve will move towards raising interest rates by 75 basis points in September.

Alternatively, some economists believe that the current jobs figures are deceiving, highlighting the fact that the labor participation rate is a paltry 62.2% in June. Many economists and investors argue that labor participation highlights a greater issue within the economy.

As the cost of living soars, many retirees will be forced back into the workforce as their fixed incomes are diminished by high inflation rates.

Today, gold prices fell 0.76% to $1,785.40 per ounce. Silver dropped 1.14% to $20.14 per ounce. Platinum increased 0.65% to $953.80 per ounce, while Palladium rose 3.49% to $2,189.00 per ounce. Bitcoin climbed 2.64% to $23,221.30.

Do you believe that the unemployment figures indicate that the economy is getting better? Or are labor participation rates a better indicator of a struggling economy?

US Misery Index Hits Highest Level in 11 Years

Aug. 4, 2022

The US economy currently faces a variety of issues, such as contracting GDP, increased layoffs, and high inflation. This economic problem is negatively affecting Americans, leading to the highest spike in the misery index in 11 years.

Misery index and gold prices rise

The misery index is a measure of economic distress felt by households. This is due to a rising cost of living amid unemployment fears. The misery index is computed by combining the unemployment rate with the inflation rate.

The latest misery index data released for June rose by 12.5% month-over-month which is higher than the 2007-2009 recession when the index hit 11.4%.

Consumer sentiment has cratered as the misery index increases, proving to many economists that the US is in a recession and American households are feeling the negative consequences of a shrinking economy.

Many investors and financial analysts are looking at gold as a great investment to hedge against inflation.

Today, gold prices jumped 0.20% to $1,796.10 per ounce. Silver spiked 0.23% to $20.44 per ounce. Platinum increased 0.45% to $945.60 per ounce, while Palladium rose 2.21% to $2,130.50 per ounce. Bitcoin climbed 1.58% to $22,880.70.

Do you think American households are financially suffering from an economic downturn? If so, in what specific ways?

Shipping Company Warns of Slowing Demand 

Aug. 3, 2022

Maersk, a Danish shipping and logistics company, warns of a tightening demand for goods as it witnesses warehouses filling up to capacity. The shipping company anticipates a deceleration in global shipping container demand as a result of supply chain bottlenecks and lower consumer confidence.

shipping bottlenecks

Maersk said that the company filled 7.4% fewer shipping containers on vessels for the second quarter of 2022 year-over-year.

The information released by Maersk is viewed as a barometer for international trade by economists and investors alike.

The conjunction of growing international geopolitical conflicts and China’s Covid-19 lockdowns exacerbated the situation, creating worsening bottlenecks internationally. 

While many investors believe that this drop in demand might alleviate inflation temporarily. They also worry it will lower global GDP even further. This could positively affect gold prices in the long term.

Today, gold prices dipped 0.20% to $1,768.40 per ounce. Silver fell 0.23% to $20.14 per ounce. Platinum decreased 0.45% to $909.00 per ounce, while Palladium sank 2.21% to $2,057.00 per ounce. Bitcoin rose 1.58% to $23,357.80.

Will inflation slow down as demand for international goods drops?

Tensions Rise Between US and China as Nancy Pelosi Arrives in Taiwan 

Aug. 2, 2022

Gold prices rally Tuesday morning as tensions rise between the US and China following Nancy Pelosi’s arrival in Taiwan. 

Taiwan Flag

The CCP has declared Nancy Pelosi’s arrival a direct violation of the One China Policy. This policy contains the US’s acknowledgment that Taiwan is a part of China. Pelosi is the highest ranking US to visit Taiwan in 25 years.

The Speaker of the House’s visit is part of an Asian tour, which included Malaysia, Singapore, South Korea, and Japan. However, the CCP warned of “unbearable consequences” if Pelosi were to visit the island of Taiwan.

As a result of Pelosi’s arrival, China has initiated its Civil Defense Warning sirens. The PLA has sent Air Force Su-35 fighter jets to cross over the Taiwan Straight.

Furthermore, little is known about China’s plans to respond to the visit. 

Today, gold prices rose 0.30% to $1,786.70 per ounce. Silver fell 0.69% to $20.42 per ounce. Platinum decreased 0.99% to $926.50 per ounce, while Palladium sank 6.64% to $2,106.00 per ounce. Bitcoin dropped 1.16% to $23,003.90.

What actions do you think China will take in response to Nancy Pelosi’s visit to Taiwan? How will this affect gold prices?

Wall Street Analysts Predict Gold Prices will Rally this Week as the Federal Reserve Shifts Monetary Policy

Aug. 1, 2022

In a report conducted by Kitco News Weekly Gold Survey, investors and Wall Street analysts believe that gold prices will rally this week. The prediction comes as the price spiked by 2% while testing a crucial resistance point.

gold prices sore

Investors suggest that higher gold prices have been led by the assumption that the Fed will reverse course on its monetary policy. They also believe the Fed will become dovish once again. 

Jerome Powell has said he would slow the tightening of the money supply as the economy begins to react to higher interest rates. 

If the Fed pivots on monetary policy, gold investors will become bullish, while bearish investors would leave the market. This may potentially lead to a short-squeeze on gold. Gold prices rose 0.27% to $1,781.60 per ounce. Silver fell 0.07% to $20.60 per ounce. Platinum increased 1.34% to $926.50 per ounce, while Palladium jumped 3.21% to $2,241.00 per ounce. Bitcoin grew 0.61% to $23,449.10.

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