EQUITIES
Shares in Asia-Pacific slipped in Thursday trade following overnight release of the U.S. Federal Reserve’s July meeting minutes.
The Nikkei 225 in Japan declined 0.72%, and in South Korea, KOSPI dipped 1.33%. Mainland Chinese stocks also fell, with the Shanghai composite slipping 0.71% while the Hong Kong’s Hang Seng index slipped 1.71%.
In Singapore, the Straits Times index declined 0.97%, the S&P BSE Sensex in India lose 0.29%, and over in Australia, the S&P/ASX 200 fell 0.51%.
Overnight on Wall Street, the S&P 500 and Nasdaq 100 fell for a second day. The Dow Jones Industrial Average fell 382.59 points to 34,960.69, the S&P 500 lost 1.07%, to 4,400.27 and the Nasdaq Composite dropped 0.89%, to 14,525.91.
OIL
Crude prices extended their losses into a sixth day on Thursday, hovering near 3-month lows, hurt by growing fears over slower fuel demand amid a spike in COVID-19 cases worldwide while a surprise build in U.S. gasoline inventories also added to pressure.
According to data by the EIA, the U.S. crude inventories fell 3.2 million barrels last week to 435.5 million barrels, their lowest since January 2020. However, the gasoline stocks rose by 696,000 barrels to 228.2 million barrels, against analysts' expectations for a 1.7-million-barrel drop.
The Brent now traded at $67.48 per barrel, while U.S. crude futures traded at $64.59 per barrel.
Overnight, the Brent settled at $67.23 a barrel, and the WTI ends at $65.46 per barrel.
CURRENCIES
U.S. Treasury yields were little changed. Benchmark 10-year notes were last at 1.263% having risen to as high as 1.300% before fell back following the release of the Fed minutes.
However, the greenback reacted more strongly with the dollar index climbing to 93.434, its highest since April 1.
GOLD
Safe haven gold fell as dollar strengthened after U.S. Fed’s policy meeting minutes showed that its officials were largely on board to start easing bond purchases this year.
Spot gold fell 0.6% to $1,777.70 per ounce, heading for its biggest 1-day percentage decline since Aug. 9. U.S. gold futures fell 0.2% to $1,781.30.
Spot silver fell 0.9% to $23.21 per ounce. Platinum dropped 0.9% to $987.40. Palladium steadied to $2,423.50, after hitting its lowest level since March 16 at $2,409.68.
ECONOMIC OUTLOOK
Asian shares fell on Thursday while the dollar reached multi-month highs against peers, after minutes from the U.S. central bank's last meeting sparked the increasing prospect of reduced monetary stimulus later this year.
The minutes from July policy meeting published Wednesday showed U.S. central bank policymakers saw the potential to ease bond-buying programme this year if the economy continues to improve as expected.
However, officials also magnified the importance of the next few months’ jobs reports, with solid gains needed to meet the Fed’s expectations and show that the coronavirus has not begun to again slow the economy.
The ongoing spread of the COVID-19 Delta variant and disappointing economic data continue to drive up concerns that the global economic comeback might be diminished, while turmoil in Afghanistan and a new China crackdown on the technology sector added fuel to the fire.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.416 and 110.765.
- Support line of 109.182 and 108.914.
Commentary/ Reason:
The greenback traded at 110.167 yen, moves further from the level below 109.1 earlier this week.
The pair takes out post-FOMC minutes highs, as the bulls continue to take advantage of the unabated U.S. dollar demand across the board.
Higher T-note yields and weakness in stocks also are supportive of the dollar. The dollar also strengthened on yen weakness after the Japanese government extended its pandemic state of emergency in seven prefectures, including Tokyo, until September 12.
The USD/JPY pair initiated a strong rebounded from the 109.1 price level, as bullish momentum has started to take hold. However, the pair will need to crack the 50-Daily Moving Average to unleash the recovery towards the August 13 highs of 110.41.
The daily RSI has pierced through the midline, reclaiming the bullish territory, which suggests that the tide has turned in favour of the optimists.
