Australia Exchange Exchange Financial Breakfast on August 24: Data shows that U.S. economic activity is close to stagnation, and gold prices have risen for three consecutive days to near two-week highs

The dollar weakened against a basket of currencies on Wednesday after data showed US business activity came to a near standstill in August, recording its slowest growth since February as demand for new business in the huge services sector shrank. Gold jumped 1% to a near two-week high on Wednesday, helped by US Treasury yields and a pullback in the dollar as investors looked to the Jackson Hole seminar for guidance on interest rates.

The dollar weakened against a basket of currencies on Thursday after data showed U.S. business activity came to a near standstill in August, posting its slowest growth since February as demand for new businesses in the sprawling service sector shrank. Gold jumped 1 percent to a near two-week high on Wednesday, helped by U.S. Treasury yields and a pullback in the dollar as investors looked to the Jackson Hole seminar for guidance on interest rates.Commodity closing situation:US gold futures closed 1.1 per cent higher at $1948.10. Brent crude oil futures fell 0.98 per cent to $83.21 a barrel, down as much as 2.5 per cent in early trading. US crude oil futures fell 0.9 per cent to $78.89, down 3.4 per cent.

US stock market closing:The Dow ended up 0.54% at 34,474.17; the S & P 500 closed up 1.11% at 4,436.22; and the Nasdaq Composite closed up 1.59% at 13,721.03.

Thursday ForwardPrecious metal

Gold prices jumped 1% to a near two-week high on Wednesday, helped by U.S. Treasury yields and a pullback in the dollar as investors looked to the Jackson Hole seminar for guidance on interest rates."It [gold] itself is a bit oversold," said Bob Haberkorn, senior market strategist at RJO Futures. "We got a rally driven by some bargain buying and then short covering."

Yields on benchmark 10-year Treasury bonds fell from a near 16-year high hit the previous session, while the dollar fell following the release of weak U.S. Purchasing Managers Index (PMI) data, making gold more attractive to holders of other currencies.

US business activity came to a near standstill in August, growing at the slowest pace since February as demand for new businesses in the vast services sector contracted. The preliminary US composite purchasing managers' index, which tracks manufacturing and services, fell to 50.4 in August from 52 in July, the biggest drop since November 2022, S & P Global said.

Market participants will focus on Federal Reserve Chairperson Jerome Powell's speech in Jackson Hole on Friday for more clues about the path of interest rates.

According to the CME's FedWatch tool, the probability that the Federal Reserve will leave interest rates unchanged at its September meeting is currently 88.5%.

Spot silver jumped 4.1% to $24.34 an ounce; platinum rose 1.4% to $931.65. Palladium rose 0.9% to $1,273.53.

crude oil

Oil prices fell nearly 1 percent on Wednesday as rising U.S. gasoline inventories and weak global manufacturing data overshadowed optimism that U.S. crude inventories would decline more than expected.Gasoline inventories in the US climbed 1.50 million barrels last week, compared with analysts' expectations of a decline of 888,000 barrels. The US Energy Information Administration (EIA) said US crude inventories fell by 6.10 million barrels in the week to August 18, helped by strong refining activity and high levels of exports. Analysts had expected inventories to fall by 2.80 million barrels. "The EIA data is mixed," said John Kilduff, partner at Again Capital.

Manufacturing data from a series of Purchasing Managers' Index (PMI) surveys show that the health of the global economy is not optimistic. Factory activity in Japan contracted in August for the third month in a row. Business activity in the eurozone also fell more than expected, especially in Germany. The UK economy looks set to contract in the current quarter and is in danger of falling into recession. US business activity in August was near a plateau, growing at its weakest pace since February.

On Thursday, Federal Reserve officials and policymakers from the European Central Bank, the Bank of England and the Bank of Japan will travel to Jackson Hole, Wyoming, and markets are also looking for hints on the outlook for interest rates. The focus has shifted to keeping rates at current levels rather than raising them further, but it could take longer than previously thought.

On the supply side, Iranian state media quoted Iran's oil minister as saying that despite U.S. sanctions, Iran's crude oil production will reach 3.40 million barrels per day by the end of September.

Amid supply uncertainty, Saudi Arabia is likely to extend a third straight month of voluntary cuts of 1 million barrels per day into October as it aims to further reduce global inventories, five analysts said.

foreign exchange

The dollar weakened against a basket of currencies on Wednesday after data showed U.S. business activity nearly stalled in August, posting its slowest growth since February, as demand for new businesses in the sprawling service sector contracted.S & P Global said the preliminary U.S. composite purchasing managers' index (PMI), which tracks manufacturing and services, fell to 50.4 in August from 52 in July, the largest drop since November 2022.

Michael Brown, a market analyst at Trader X, said the data did "pretty much threaten the'American exceptionalism 'that the market has been trading on for the past few weeks."

A strong labour market and increasingly resilient consumer spending have eased recession fears for months and led to an upward revision of gross domestic product growth forecasts. But Wednesday's data painted a tepid picture of the economy, with the dollar index, which measures the greenback against six major currencies, falling 0.14 per cent to 103.45.

The index hit a more than two-month high of 103.98 in early trading after dismal business activity data from Europe weighed on the euro and sterling.

The preliminary HCOB eurozone composite purchasing managers' index, compiled by S & P Global, fell to 47.0 in August from 48.6 in July, the lowest since November 2020. The services PMI fell to 48.3 from 50.9, the first time this year that it has been below the 50-point threshold.

Germany's composite PMI fell to its lowest since May 2020 as manufacturing output contracted and services activity contracted again. The euro fell to $1.0802 after the German data, its lowest level since mid-June.

Sterling also fell to its lowest level in more than a week at $1.2623. The S & P Global/CIPS PMI fell to 47.9 in August, its lowest level since January 2021, while surveys also showed price and cost pressures easing.

Trader X's Brown said, I don't think anyone would be particularly surprised by the weakness in the UK or Europe, nor by the plunge in sterling and the euro earlier, but the U.S. data is more worrying given the resilience of the U.S. economy so far this year.

Sterling fell 0.17 per cent to $1.271 in late trading. Jonathan Petersen, senior market economist at Capital Economics, said in a note: "The weaker-than-expected PMI data for European economies is consistent with our view that the euro and sterling will fall further against the dollar in the coming months."

Overall, traders expected limited currency market volatility ahead of Federal Reserve Chairperson Jerome Powell's remarks at the Global Central Bank Symposium in Jackson Hole, Wyoming, on Thursday through Saturday.

Meanwhile, the dollar fell 0.71% against the yen to a more than one-week low of 144.845 yen, away from a nine-month high of 146.565 hit last week, a level that has traders on alert watching for any signs of intervention.

The dollar's break above Y145 last year sparked intervention, leading to speculation that Tokyo could soon re-enter the market to support the yen if it weakens further.

Market News

The strength of US employment has been exaggerated, but it has not changed its resilience

The Bureau of Labor Statistics has tentatively estimated that the number of non-farm payrolls in the United States for the year ending in March will be revised down by 306,000. Last year, the US government's employment report showed that job growth was higher than expected almost every month. This continued strength has surprised economists time and again and is a key reason behind the Federal Reserve's steady rate hikes. While preliminary estimates suggest that the strength of the US job market has been exaggerated, this does not fundamentally change the resilience and strength of the US job market, even though the job market is gradually cooling. The sharpest downgrades were in transportation and warehousing, and professional and business services. Retail and wholesale trade employment is expected to be revised upwards.

Production is falling again, and the U.S. manufacturing industry is contracting again

US companies' output growth slowed in August as economic activity across the private sector came to a near standstill, according to S & P Global Review. Manufacturing fell back into contraction as production fell again, while growth at service providers slowed to its lowest level since February. Weak customer demand slowed the economy as a whole, with total new orders falling for the first time in six months. New orders for both manufacturers and service providers contracted. Meanwhile, cost pressures regained some momentum as input price inflation picked up on higher fuel, wage and raw material costs. Efforts to remain competitive and boost sales, however, held back the pace of higher selling prices, slowing from July.

India plans to ban sugar exports for the first time in seven years

India is expected to ban exports from sugar mills in the 2023/24 year, which starts in October, for the first time in seven years, as insufficient rainfall has led to reduced sugarcane production, according to three Indian government sources. India's withdrawal from the global market could push up benchmark sugar prices in New York and London, triggering fears of further inflation in global food markets. Prices in both markets are already near multi-year highs. Monsoon rains in the main sugarcane-growing areas of the western state of Maharashtra and the southern state of Karnataka have been 50 per cent below average so far this year, according to the Indian Meteorological Department. Together, the two regions account for more than half of India's total sugar production. An industry official said erratic rains would lead to a drop in sugar production in 2023/24 and even reduce acreage in 2024/25. Sugar production in India could fall 3.3 per cent to 31.70 million tonnes in 2023/24.

The White House is pushing a new "student loan program" that could slash payments for millions of people

The Biden administration said on August 22 that it is overhauling the student loan repayment plan to make it easier for students to afford repayments by reducing the amount of monthly payments and controlling unpaid interest. According to a report on August 22, the White House and the Ministry of Education said that tens of millions of Americans are eligible to join the new student loan plan proposed by the Biden administration. This new plan will reduce the repayment amount by $1,000 per year for ordinary borrowers and $2,000 per year for ordinary graduates of four-year public colleges or universities in the United States.

Phase 11 of the world's largest natural gas field comes online

According to Simon Watkins, an analyst at energy website Oilprice, Iran's oil ministry has confirmed that the 11th phase of the South Pars gas field, the largest in the world, has started production; as early as January 16, 2016, when the Joint Comprehensive Plan of Action (JCPOA) was implemented, the ultimate goal of Western international oil companies was to participate in the South Pars gas field.