The key headlines:
SPX500 exceeded 4,500 USD for the first time. 4,510 USD (+1,300 points)
The U.S. dollar reached its nine-month highs but retreated afterwards. USDX 92.67 (+793 points)
The RBNZ failed to become the first G10 central bank to lift the rate.
Gold jumps after Fed fails to signal taper timeline. 1,810 USD (+373 points)
Demand concerns hit the oil prices. 72 USD (-3 USD)
Bitcoin broke the crucial level. 48,500 USD (+9,898 USD)
Gold
Monthly change: XAUUSD -0.3%
The plunge of XAUUSD to 1,687 USD on 9 August was triggered by strong July non-farm figures and Atlanta Fed President Raphael Bostic’s comments about the urgency in pushing for a tightening. Between October and December, the Fed could start tapering 120 billion USD flopping monthly into bonds and mortgage-backed securities to support the COVID-restrained economy, Bostic said at a live-streamed event. This possibility would be correct if the job market growth over the next couple of months could match July’s near-one-million, the Atlanta Fed chief added. Higher interest rates and a stronger U.S. dollar that accompanies them usually push gold prices down, given its status of a non-interest-bearing investment.
Nevertheless, XAUUSD had been rising for the last two weeks of the month and reached 1,822 USD on 30 August, thanks to the new COVID-19 outbreaks worldwide. Moreover, the dovish comments of Federal Reserve Chairman Jerome Powell eased concerns that policymakers would tighten the monetary policy soon. Powell’s speech at the Kansas City Fed’s annual Jackson Hole symposium on 27 August was slightly dovish but not dovish enough to jumpstart any large-scale buying in precious metals. The U.S. dollar and real Treasury yields sank as the Fed Chair spoke, allowing gold to gain past two of its main moving averages. Traders will now focus on the strength of the U.S. labour market, which will likely determine the timing of tapering with inflation at target. The following non-farm payrolls report is due this week, with a repeat of the substantial outperformance seen in August almost certain to hit gold.
Currencies
Monthly change: EURUSD -0.7%, GBPUSD -0.64%, USDJPY +0.61%, NZDUSD +0.9%
EURUSD fluctuated monthly around 2% from 1.1900 highs to 1.16664 lows. The pair closed at 1.18045. The U.S. dollar went down sharply last Friday, following the perception of the Fed's Chairman words that the country would maintain the financial support. The market does not expect the ECB to change its rhetorics at the September meeting, although the Fed would come to its next monthly plenary with NFP results as key drivers.
The greenback knockout is an external driver which led to a serious jump of the sterling. GBPUSD had retreated from 1.3800 and closed at 1.37650. The pair has risen 1.35% during the week. Earlier, the U.K. pace of vaccination allowed its currency to be the best performer among G10 countries. But it lost its lead then. Since the British business confidence jumped to its highest level in more than four years in August, the pound might return its position.
USDJPY was very strong during the first half of the month and rose to 111.00. The greenback's power came into play as the market awaited strong American statistics and its development into the Fed's steps towards policy tightening. Since no events followed, the pair declined and traded within a range of 109.500-110.220 for the rest of the month. The pair closed at 109.880.
NZDUSD was the top volatile currency pair of the month with a 4% fluctuation between its highs and lows. The RBNZ could have become the first top tier central bank to raise the interest rate. But the lockdown in the country stole its probable leadership. The pair edged below 0.700 and closed at 0.69900 as New Zealand's lockdown was extended for another two weeks.
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