Dollar resumes decline, US consumer confidence, end-of-month flows to

Here is what you need to know on Tuesday, August 31:

Markets are on course to ending August on a high note, with the safe-haven dollar diving in an extended reaction to Fed dovishness. End-of-month flows could cause jitters and investors have plenty of figures such as US consumer confidence, eurozone inflation, Chinese PMIs and Canadian GDP to chew on. 

Upbeat mood: Major Wall Street indexes closed at record highs on Monday, but also bonds remain bid. The downward pressure on US Treasury yields is weighing on the dollar, which has resumed its falls after taking a breather on Monday. 

Fed support: Federal Reserve Chair Jerome Powell’s dovish speech on Friday continues providing a tailwind to equities. The bank seems in no rush to withdraw stimulus in its upcoming September meeting. Nonfarm Payrolls are awaited as the next significant taper clue. 

Geopolitics: Markets seem to be content with the end of America’s war in Afghanistan and the relatively small damage caused by hurricane Ida to New Orleans. 

Chinese weakness: Investors seem to ignore China’s disappointing Non-Manufacturing Purchasing Managers’ Index, which contracted and fell to 47.5 points last month. Beijing continues its pursuit of local tech companies, focusing on video gaming. The fall in Chinese stocks is not reverberating around the world.

EUR/USD has advanced toward 1.1850 ahead of preliminary eurozone inflation figures for August. The headline Consumer Price Index is forecast to hit 2.7% and Core CPI 1.5%, both rises. Final growth figures from France and Italy and employment statistics from Germany are also of interest. 

USD/CAD is trading below 1.26 as WTI Crude Oil edges up toward $70, paring losses seen earlier this month. Canada releases its Gross Domestic Product data for June and the entire second quarter. The nation is set to report an annualized increase of 2.5%.

US data: After the University of Michigan’s Consumer Sentiment Index plunged to decade-low levels in August, the Conference Board’s parallel publication is of higher interest. Economists expect only a minor decline, the result of the spread of the Delta COVID-19 variant. 

Conference Board Consumer Confidence August Preview: Negative dollar risks

Coronavirus cases continue rising in America, yet at a decelerating pace of roughly 20% increase in the past fortnight. Globally, infections are flattening, but a new worrying variant was reported in South Africa. 

Flows: A turbulent August draws to an end with money managers adjusting their portfolios. Erratic movements could be seen around the London fix at 15:00. 

Cryptocurrencies have been edging lower, with Bitcoin changing hands at around $47,000, Ethereum holding up somewhat better near $3,200 and Cardano’s Ada around $2.70. 

Gold has benefited from the upbeat mood, extending its gains above $1,815. 

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