Gains made by the US Dollar (USD) on Monday are now being reversed as the flight to safety soon subsided. The markets evaluated the situation in Israel and Gaza quite quickly. Markets briefly braced for a potential regional spillover to the larger oil-producing nations, but it wasn’t until late Monday night that Saudi Crown Prince Mohammad bin Salman issued a statement urging both sides to sit down and discuss their positions rather than resorting to violence.
Since several US markets were closed on Monday for the public holiday, they need to catch up a little with the current situation. Both Dallas Federal Reserve (Fed) President Lorie Logan and Fed Governor Philip Jefferson declared on Monday that the road of interest rate increases has come to a halt. In the meantime, prices in the US bond market are reaching a top and yields are falling as a result of Monday’s shortened trading day.
As market sentiment recovers and Bank of England (BoE) policymaker Katherine Mann advocates for a more aggressive strategy to bring inflation down to 2%, the Pound Sterling (GBP) stabilises after rebounding from a six-month low. However, she emphasised that she does not guarantee the accomplishment of price stability in a timely manner. Last week, BoE Governor Andrew Bailey stated that he expected inflation to decrease to or below 5% by year’s end.
The effects of increasing interest rates are most noticeable in the UK’s manufacturing and construction industries. The UK’s factory activity has been declining, and the PMI gauge has frequently been below the threshold of 50.0. Investors will turn their attention to the UK manufacturing activity and GDP figures for August, which will be revealed on Thursday, to gain better understanding of the current state of the economy.
Following a prolonged sell-off Gold recovered ground and currently hovers around the 1857$ mark. We have been taking advantage of some recent range-bound activity in the last couple of days. We await FOMC minutes, consumer and producer inflation data + updates from the Israel conflict. Check out some of the profits we have made today on Gold!