Another strong start to the week for the Dollar. The DXY gained 0.3% on Monday and appeared comfortable holding the 103 level during yesterday’s session. The strength is reflective of the overwhelming expectation of a mere 25 basis point cut during the next Fed meeting. It has to be said that the next meeting is still three weeks away however, so the prediction isn’t exactly baked in.
Rates on the Euro are expected to be slashed another 25 bps during the ECB meeting tomorrow, bringing the target rate down to 3.4%. For comparison, rates on the Greenback are still 5% and the differential is beginning to weigh on the common currency. EURUSD closed below 1.09 yesterday, the worst daily close since early August. The Australian Dollar is also feeling the pressure, its status as a commodity currency coupled with poor global manufacturing forecasts are beginning to take their toll. USDAUD challenged 1.50 this morning but has since retreated.
Speaking of commodities, gold gained half a percent yesterday, bringing the precious metal up to $2,662 an ounce – a hair’s breadth below its record high. Despite no real resolution in the Middle East, oil prices experienced a significant drop this week, with Brent Crude back down to around $74 a barrel.
The poor manufacturing outlook hit the semiconductor industry hard on Tuesday, leading many tech stocks to take a beating. ASML Holding (ASML) plummeted an impressive 16.3% after accidentally publishing their quarterly earnings report a day early, revealing dismal bookings and sales forecasts. Not wanting to be left out, AMD and NVidia (NVDA) also joined in on the action by falling 5.2% and 4.7% respectively. The Nasdaq Composite closed 1% lower during Tuesday’s session and the Dow Jones and S&P 500 weren’t far behind with 0.75% drops of their own.
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