As of midweek, financial markets are experiencing a period of volatility, with investors eagerly seeking the next key developments. The economic agenda in the United States includes the release of Wholesale Inventories data for August. Additionally, the US Treasury is scheduled to conduct a 10-year note auction, and the Federal Reserve will share the minutes from its September policy meeting later today.
The US Dollar Index, which measures the dollar’s performance against a basket of six major currencies, remained largely unchanged for the second consecutive day, closing on a slightly positive note and holding above the 102.50 level in early European trading. This steady positioning of the dollar appears to be bolstered by a risk-averse market atmosphere. In contrast, US stock index futures are reflecting a decline, down between 0.2% and 0.4% as the session progresses. Meanwhile, in Asia, the Shanghai Composite Index experienced a sharp decline of nearly 7%, and Hong Kong’s Hang Seng Index fell over 1%. This drop comes after reports indicated that China’s Finance Ministry is preparing to announce a substantial 2 trillion Yuan fiscal stimulus package set for October 12.
In New Zealand, the Reserve Bank of New Zealand made a significant move by reducing its policy rate by 50 basis points to 4.75%. The bank acknowledged that the economy is currently operating with excess capacity, which is influencing price and wage adjustments towards a low-inflation scenario. As a result, the New Zealand dollar saw considerable selling pressure, trading at its lowest point in over two months, dipping below 0.6100.
In the currency markets, the EURO is struggling to maintain its footing against the dollar, retreating toward the 1.0950 level. Additionally, GBP/USD had a slight uptick on Tuesday, but efforts to stabilize above 1.3100 have proven challenging, with current trades near 1.3080. The USD/JPY pair had a flat close on Tuesday but is gaining traction in the Asian session, up 0.3% at 148.60. gold prices have also been under significant pressure, hitting their lowest levels in over two weeks around $2,600 before stabilizing slightly in the European morning, trading around $2,610.
