Volatility Lower on Wednesday, Markets Seem Calm
07 September 2022
So far, there have been no significant developments in the markets on Wednesday, resulting in muted trading and low volatility.
Nevertheless, the USD remains bid, with the dollar index pushing to new cycle highs, mainly due to the collapse of the Japanese yen. As of writing, the USDJPY pair was up another 1%, trading at fresh 24-year highs at 144.
Chinese data disappoint again
Yuan losses widened as it dropped 0.4% to a two-year low of around 6.9791 to the dollar. Data revealed that China's trade surplus fell far short of August forecasts, with imports and exports underperforming due to the nation's ongoing economic difficulties.
This year, COVID-related disruptions have significantly affected both factory production and consumer spending in China. In addition, investors have been skeptical of Chinese markets because of concerns regarding more COVID-related restrictions in the nation.
On the other hand, the US Services ISM increased from 56.7 to 56.9 in August, above the market's estimates of a decline to 55.1. In addition, both employment and new orders indices rose slightly, while the prices paid gauge declined marginally.
EU macro figures eyed
Data released on Wednesday revealed that German industrial production fell 0.3% on a monthly basis in July, slowing from the revised 0.8% growth the previous month as the outlook for Europe's largest economy continued to deteriorate in the wake of Russia's invasion of Ukraine in February and the ensuing regional energy crisis.
The second-quarter GDP and employment figures for the Eurozone will be released later on Wednesday, and both are anticipated to show a worsenthe economic situation.
Truss promises energy bailouts
As she settled into her first day in office, the new UK prime minister, Liz Truss, promised a significant package of help this week to address the country's skyrocketing energy prices.
With the nation experiencing severe economic hardships, she replaces Boris Johnson. She is anticipated to outline proposals on Thursday that may include the government spending up to 200 billion GBP over the next 18 months to control energy costs.