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Forex Today: Markets quiet down ahead of key data releases

Here is what you need to know on Tuesday, August 30:

Following Monday's choppy session, markets seem to have calmed on Tuesday with the US Dollar Index (DXY) continuing to move sideways below 109.00 in the early European morning. US stock index futures are up between 0.2% and 0.4%, pointing to an improving market mood. Business and consumer sentiment data from the euro area and August inflation data from Germany will be featured in the European economic docket. In the second half of the day, the Conference Board's Consumer Confidence Index and JOLTS Job Openings data from the US will be watched closely by market participants.

FOMC Chairman Jerome Powell's hawkish remarks at the Jackson Hole Symposium last week caused the probability of a 75 basis points rate hike in September to rise to 70% and helped the dollar stay resilient against its rivals. The benchmark 10-year US Treasury bond yield, however, remained steady at around 3.1% on Monday and didn't allow the DXY to continue to gather bullish momentum. 

During the Asian trading hours on Tuesday, news from China showed that the country tightened coronavirus-related restrictions in Shenzen. There are also reports suggesting that China could start limiting industrial output to reduce emissions. Reflecting the negative impact of these developments, the Shanghai Composite lost nearly 0.5% on Tuesday. 

EUR/USD managed to stage a rebound and closed virtually unchanged slightly below parity on Monday. Hawkish comments from European Central Bank officials and heightened expectations for a 75 basis points ECB rate hike in September helped the shared currency hold its ground. Heading into the European session, the pair trades in a relatively tight range below 1.0000. Inflation, as measured by the Consumer Price Index, in Germany is forecast to rise to 7.8% on a yearly basis in August from 7.5% in July.

GBP/USD erased a small portion of its daily losses during the American trading hours on Monday but closed the day in negative territory. The pair fluctuates in a relatively tight range above 1.1700 early Tuesday.

Gold dropped to $1,720 during the European session on Monday before ending the day flat slightly below $1,740. XAU/USD stays under modest bearish pressure on Tuesday and trades at around $1,730.

USD/JPY gained nearly 100 pips on Tuesday but lost its bullish momentum after having failed to break above 139.00. The pair moves sideways around mid-138.00s on Tuesday. The data from Japan showed earlier in the day that the Unemployment Rate remained unchanged at 2.6% in July as expected.

Bitcoin rose nearly 4% on Monday and managed to reclaim $20,000. BTC/USD trades in positive territory near $20,5000 early Tuesday. Ethereum registered strong daily gains on Monday and extended its recovery beyond $1,500 on Tuesday.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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