Investors cheered U.S. manufacturing data which followed similarly upbeat Chinese and European manufacturing indicators this otherwise depressing week.
Manufacturing data over recent days have fuelled expectations that the world’s major economies were recovering from the coronavirus damage. On Tuesday, data showed that U.S. manufacturing activity sped to a nearly two-year high in August on a surge in new orders.
Also feeding the positive mood were signs that Washington was moving closer to offering further fiscal stimulus support.
However, German retail sales fell unexpectedly in July, down 0.9% in July, data showed on Wednesday. Weak data dashed hopes that household spending in Europe’s largest economy can drive a strong recovery in the third quarter. Also, Tuesday’s eurozone inflation data were unexpectedly negative.
Worse-than-expected Australian GDP data confirmed the country’s economy shrank 7% in the three months to June. On an annual basis, GDP declined by 6.3%. Australia joins the United States, Japan, UK and Germany in a technical recession.
Investors will now be looking to see if the ECB will follow the U.S. Federal Reserve in shifting its policy towards inflation.
WHO expressed concerns after a U.S. health official said a coronavirus vaccine might be approved before the final trials. In response, the White House announced that the United States would not join a global vaccine plan due to WHO involvement citing corruption. WHO’s COVID-19 vaccine plan is to ensure equitable access to vaccines for the 172 participating countries.
START TRADINGForex – Manufacturing data fuel recovery expectations
Focus turns to economic data that is likely to show a jump in private jobs in August.
The dollar index added 0.4% at 92.612, rising on Tuesday. The US Dollar extended gains in early London trading, then stabilised as the morning progressed.
The Australian dollar lagged after the country confirmed that is in a recession, down 0.4% on the day.
The euro fell 0.4% at $1.18645, retreating from the key $1.20 level reached for the first time since 2018 in the previous session. The single currency has surged more than 10% since its low point in March.
Sterling fell against a rebounding U.S. dollar on Wednesday but rose against the falling euro. Traders looked to speeches from several Bank of England officials for direction.
The pound sterling fell 0.2% against the dollar to $1.3364, having risen to an eight-month high above $1.34 the day prior. The pound was up 0.3% against the euro at 88.74 pence, a three-month high.
Oil prices rose towards $46 a barrel on Wednesday, gaining for the third day. Α report that U.S. crude inventories fell and stronger manufacturing data supported prices.
Gold prices backtracked on Wednesday from a near two-week high in the prior session. Strong U.S. manufacturing data raised hopes of a swifter global economic recovery.
Spot gold fell 0.7% to $1,957.15 per ounce by 1133 GMT, after hitting its highest since Aug. 19 at $1,991.91.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money