Gold and USD Fundamentals
As pressure from a strong US dollar and high Treasury yields intensifies as a result of Federal Reserve (Fed) policymakers believing that additional policy tightening is necessary, the price of gold (XAU/USD) falls to a new monthly low. As excess inflationary pressures appear stickier than anticipated and may push the Fed to keep interest rates elevated for a longer period than forecast, the precious metal slides below the critical support of $1,900.00.
Due to a tight labour market and robust consumer spending, the US economy has held up well, but the manufacturing sector has been a significant drag. An improvement in the Manufacturing PMI could help the US economy grow even more.
While seeking to extend upside over the immediate barrier of 1.3540 in the early New York session, the USD/CAD pair is under some selling pressure. The Loonie currency is struggling to maintain its comeback as the US Dollar experiences a small sell-off following a new 10-month high of 106.45.
S&P 500 Strength
The S&P 500 starts out strongly as investors downplay the threat of a government shutdown. The Federal Reserve (Fed) is anticipated to maintain higher interest rates for a longer period of time, therefore the general market tone is still cautious. The US Durable Goods Orders report for August exceeded forecasts, suggesting that the US Dollar may start moving higher again.
As spot purchasers shook out bearish derivative bets during the early U.S. trading hours, bitcoin increased in value despite the dollar’s ongoing climb.
The most valuable cryptocurrency by market cap increased 2% to $26,750 even as the U.S. dollar index, which measures the value of the dollar relative to a basket of six other currencies, hit a new high of 106.48. Risky assets, such as cryptocurrencies, typically experience a bearish reaction to a rise in the dollar index.