Australian Exchange Financial Breakfast on August 10: Gold prices hit their lowest level in nearly a month, as investors await the release of the US inflation report

On August 10, the dollar fell on Wednesday, trading quietly and in range, as investors awaited Thursday's U.S. consumer price report for signs on the direction of the Federal Reserve's monetary policy. Gold prices fell; oil prices hit new multi-month highs, and global benchmark Brent crude futures hit their highest since January, after U.S. refined oil inventories fell sharply and Saudi Arabia and Russia cut production more than outweighed concerns about slowing demand.

Beijing time on Thursday (August 10), the dollar fell on Wednesday, trading quietly and in range. Investors awaited Thursday's U.S. consumer price report for signs on the direction of the Federal Reserve's monetary policy. Gold prices fell and hit their lowest level in nearly a month. Oil prices hit a multi-month high, and global benchmark Brent crude futures hit their highest since January. After U.S. refined oil inventories fell sharply, Saudi Arabia and Russia cut production to overshadow concerns about slowing demand.Commodity closing situation:US gold futures closed 0.5 per cent lower at $1950.60 an ounce. Brent crude oil futures closed 1.6 per cent higher at $87.55 a barrel, their highest since January 27. US crude oil futures closed 1.8 per cent higher at $84.40, their highest since November 2022.

US stock market closing:The Dow Jones index closed down 0.54% at 35,123.95; the S & P 500 index closed down 0.68% at 4,468.97; the Nasdaq Composite index closed down 1.17% at 13,722.02.

Thursday ForwardPrecious metal

Gold prices fell to their lowest level in nearly a month on Wednesday as investors waited on the sidelines ahead of key U.S. inflation data that could shed more light on the Federal Reserve's stance on monetary policy.Daniel Pavilonis, senior market strategist at RJO Futures, said the consumer price index (CPI) will be the fulcrum of the Federal Reserve's policy... It's a wait-and-see mode right now. "

Mr. Pavilonis added: "Gold has also been an inflation hedge, but it is fighting an uphill battle with the 10-year Treasury yield. If inflation persists and the Fed wants to raise interest rates quickly, then gold is likely to be in trouble." CPI data due on Thursday are expected to show a slight acceleration in inflation in July, with CPI expected to rise 3.3 per cent year-on-year.

Most traders don't expect the Fed to make any changes at its September policy meeting. According to CME's FedWatch tool, the probability of a 25 basis point rate hike is only 13.5%.

Spot silver fell 0.4% to $22.67 an ounce; platinum fell 1.1% to $890.34; and palladium rose 1.2% to $1,234.47.

crude oil

Oil prices hit a multi-month high on Wednesday, with global benchmark Brent crude futures hitting their highest since January after a sharp drop in U.S. refined product inventories and production cuts from Saudi Arabia and Russia outweighed concerns about slowing demand.U.S. gasoline inventories fell by 2.70 million barrels last week and distillate stocks, including diesel and heating oil, fell by 1.70 million barrels, according to the U.S. Energy Information Administration.

Andrew Lipow, president of Lipow Oil Associates, said: "Reduced inventories of refined products continue to benefit the oil market."

It has largely shrugged off a larger-than-expected increase of 5.85 million barrels in US crude inventories last week, after a record week of losses. The decline in US refined oil inventories helped to overshadow some demand concerns after Chinese data on Tuesday showed July crude imports fell 18.8% month-on-month and the lowest daily level since January.

Top oil exporter Saudi Arabia plans to extend a voluntary production cut of 1 million barrels per day for another month to the end of September, supporting prices. Russia also said it would cut oil exports by 300,000 barrels per day in September.

According to state media reports, the Saudi cabinet on Tuesday reiterated its support for the precautionary measures taken by the Organization of the Petroleum Exporting Countries (OPEC) and its allies to stabilize the market.

The market will also be closely watching the July U.S. Consumer Price Index (CPI) report, which will be released on Thursday, and CPI growth is expected to accelerate slightly year-on-year.

foreign exchange

The dollar fell on Wednesday, trading quietly and in range, as investors awaited Thursday's U.S. consumer price report for signs of the direction of the Federal Reserve's monetary policy.Investors are now focused on Thursday's US inflation data, which is particularly important for markets hungry for clues about the direction of Federal Reserve policy. Wall Street economists expect the core consumer price index (CPI) to rise 4.8% in July from a year earlier, unchanged from the previous month.

Analysts at Macquarie, led by Thierry Wizman, FX and interest rate strategist, wrote: "We remain very confident that US inflation will continue to ease, led by a slowdown in home price inflation, which accounts for 35 per cent of the headline CPI. We expect CPI to be lower than expected (up 4.7 per cent year-on-year), driven by a slowdown in primary and owner-equivalent rental inflation."

The dollar index fell 0.1 per cent to 102.46, reversing some of Tuesday's gains. The euro rose 0.2 per cent to $1.0976 and sterling slipped 0.2 per cent to $1.2721.

Overnight, Federal Reserve officials also sent more dovish signals, with Philadelphia Fed Chairperson Mark Harker saying interest rates were high enough and Atlanta Fed President Robert Bostic expressing a similar view.

But officials were by no means unanimous. Bowman, a Fed governor, said on Monday that further rate hikes were possible. The dollar rose 0.2 per cent to 143.70 against the yen.

Matthew Weller, global head of research at FOREX.com and City Index, said: "With the 10-year Treasury yield spread between the US and Japan remaining at about 3.4 per cent... and the prospect of any formal rate hike by the Bank of Japan appears to have been pushed back, the dollar has resumed its year-to-date gains against the yen and could soon hit a new high for the year in 2023, especially if [Thursday's] US CPI report is higher than expected."

Market News

European Union increases gas storage in Ukraine to ease winter shortages

While Ukraine remains mired in conflict, the European energy industry has shipped large volumes of gas to Ukraine for storage in an effort to avoid shortages in the coming winter, according to the Financial Times. Traders are spotting unusual opportunities presented by Ukraine's ample storage capacity as the ongoing conflict and sanctions force the European Union to abandon its dependence on Russian gas. Naftogaz, the Ukrainian state gas company, said 19 non-Ukrainian companies have injected gas into the country this year, up from four in 2021. Data show that pipeline capacity from the European Union to Ukraine reached its highest level in nearly three years in July this year, while planned gas shipments are expected to double this month. Naftogaz CEO Oleksiy Chernyshov said this would be a great opportunity for the European Union to build a strategic gas reserve.

As LNG supply risks intensify, European gas prices rise by 20%.

Benchmark natural gas futures jumped as much as 21 per cent today as European gas prices saw their biggest rise in almost two months as workers at some Australian plants are likely to go on strike, leading to increased LNG supply risks. Nick Campbell, director of consultancy Inspired Plc, said Asian buyers were likely to race to increase LNG imports to replace those from Australia in the event of a supply disruption, which would also affect Europe. LNG has become a baseload supply in Europe's gas supply structure, so any indication that this flow is risky would lead to price support. In addition, potential delays in seasonal maintenance in Norway also pose a risk, adding to upward pressure on prices. At least for now, bullish factors have outweighed tepid demand and unusually high inventories in Europe.

Bond market inflation indicators show market doubts about the Federal Reserve's victory over inflation

A closely watched bond market gauge of expected US inflation is rising back to a near nine-year high, signalling concern that the Federal Reserve may continue to deal with elevated price pressures in the years ahead. The rise in the gauge contrasts with broader speculation that the Fed's sharp interest rate hikes will continue to rein in surging consumer prices. Interest rate strategist Ed Al-Hussainy said inflation had fallen as a result of the Fed's aggressive actions, but there was a rising risk to underlying inflation expectations. The market has higher inflation and higher real interest rate expectations for the foreseeable future. Whether that is correct, though, remains to be seen. George Goncalves, head of US macro strategy at MUFG, also said that the market's inflation expectations are not high enough to show significant concern.

IATA: Total air passenger traffic rose 47.2% year-on-year in the first half of the year

IATA released regular passenger traffic data for June 2023 on the 9th. Total air passenger traffic increased by 31.0% year-on-year in the month and 47.2% in the first half of the year. Among them, domestic passenger traffic in June increased by 27.2% year-on-year, 5.1% higher than the same period in 2019; domestic passenger demand in the first half of the year increased by 33.3% year-on-year. International passenger traffic in June increased by 33.7% year-on-year, recovering to 88.2% in June 2019; international passenger traffic in the first half of the year increased by 58.6% year-on-year. Willie Walsh, president of IATA, said that the peak summer travel season in the northern hemisphere started strongly in June, with an average passenger load factor of more than 84%.

Iran plans to increase oil production by 250,000 bpd this summer

According to Iran's Tasnim news agency, citing the head of the National Iranian Oil Company, Iran's oil production will increase by 250,000 barrels per day by the end of this summer. Mohsen Khojasteh-Mehr, managing director of the National Iranian Oil Company, said that by the end of summer, Iran's oil production will reach 3.50 million barrels per day.

Affected by interest rate hikes, the loan losses of the US banking industry reached 19 billion dollars

According to the Financial Times, US banks suffered losses of nearly $19 billion on non-performing loans in the second quarter of this year, the highest level in more than three years, as banks grappled with rising defaults among credit card and commercial real estate borrowers. The figure was up nearly 17% from the previous three months and 75% higher than the same period last year. Overall, banks lost 61 cents for every $100 of loans made. This follows a series of aggressive interest rate hikes by the Federal Reserve, which has forced borrowers with floating-rate loans to face higher repayments. In addition, Moody's pointed out that at a time when the quality of loans is deteriorating, rising interest rates have put more pressure on the profitability of banks, as banks have to pay higher interest rates to retain savers seeking higher returns.