FISG Daily Market Wrap 17th August

Today’s Topic: “Dollar Slides as Fed Rate-Hike Bets Fade” — by Amir Amidian, Director of the InterStellar Group Research Center.

The US Dollar weakened against most major currencies as softer US economic data reduced expectations for a Federal Reserve rate hike next month. The Dollar index fell 0.1%, extending its decline to a third consecutive session and trading near levels last seen in May.The move followed Friday’s data showing US retail sales fell by the most in more than a year in July, suggesting some moderation in consumer spending. Markets now price less than a 30% probability of a Fed rate hike next month, down sharply from around 50% a week earlier.Treasury yields also moved lower, with the 2-year yield falling 2 basis points to 4.15%, while 10-year and 30-year yields declined by 1 basis point each. The combination of softer economic data and lower rate expectations provided support for risk assets.Asian markets maintained a positive tone, with the MSCI Asia Pacific index gaining 0.2%. Nasdaq 100 futures rose around 0.3%, while emerging-market currencies strengthened, with the Taiwan dollar and Thai baht among the strongest performers.

Oil and Gold Gain on Geopolitical Risk

Geopolitical tensions remained a key driver for commodities.Brent crude rose 0.2% to around $88.65 a barrel, supported by renewed Israeli attacks on Lebanon, attacks on vessels around the Strait of Hormuz and the prospect of additional US sanctions on Iran.The developments have added uncertainty to negotiations involving the US and Iran. Iran's Foreign Ministry spokesperson said talks with Oman are taking longer because of the complexity of the issues, the number of actors involved and efforts by some countries to undermine the process.Gold also benefited from the softer Dollar and geopolitical uncertainty, rising around 0.4% to $4,395 an ounce.

Japan GDP Misses Expectations

Japan's economy expanded at an annualised 1.1% quarter-on-quarter in Q2, significantly below the 2% forecast and down from 1.8% previously.The weaker-than-expected growth could complicate the Bank of Japan's communication as policymakers consider the timing of another rate increase. The Yen nevertheless edged higher against the Dollar.

Copper Nears Record High

Copper continued its strong run, with spot prices approaching record levels and trading as high as $478 per ton.The move reflects continued optimism around industrial demand and global growth expectations, although weaker economic data from major economies remains a risk to the outlook. FISG Daily Market Wrap provides a concise view of the forces moving global markets, helping investors stay informed and better prepared for what comes next.