Weekly Analysis (Week 16th Aug 2021) in English

Currencies: US Dollar

The U.S. dollar fell to a one-week low against a basket of currencies on Friday, after a survey showed U.S. consumer sentiment dropped sharply in early August, raising worries of a dent in economic activity.

The University of Michigan Consumer Sentiment index slumped to a reading of 70.2 in the preliminary August survey from 81.2 in July, the weakest reading since December 2011.

While U.S. producer prices data out Thursday showed surging prices, bolstering the case for the Federal Reserve removing some of its stimulus, it followed U.S. consumer price data on Wednesday, which indicated inflation may be peaking, potentially giving the Fed room to remain accommodative for longer.

The reason of USD dropping in last week is mainly due to the rising concerns about Covid-19 cases. Investors worried that it will threaten to slow the recovery. However, we shall wait until FOMC this week, and pay attention whether Fed is on dovish or hawkish side.

Commodities: Gold

Gold was up on Friday morning in Asia, but was set for a second consecutive weekly decline. Investors now await the U.S. Federal Reserve’s next monetary policy move.

The latest U.S. economic data, released on Thursday, said the producer price index grew 1% month-on-month in July, the largest annual increase in more than a decade.

However, the consumer price index released the day before suggested that inflationary pressures are peaking, rising a lower-than-expected 0.3% month-on-month in July. This boosted hopes that the Fed would not begin asset tapering or hike interest rates earlier than expected.

Gold price is mainly affected by USD for the past few weeks, so if we are trading gold, then must pay attention on the FOMC meeting on this Thursday. We believe it will have big impact on USD and Gold price.

Regards,
RS Analysis Team

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