©Reuters
By Geoffrey Smith
Investing.com – The dollar finally corrected after a month’s rise. Momentum faded overnight after Jerome Powell’s recent hawkish comments failed to support it at near-term overbought levels. Europe’s energy ministers meet in Brussels for crisis talks, but are unlikely to agree on much. Stocks are in for their first positive weekly close in four weeks after DocuSign (NASDAQ:) and Zscaler (NASDAQ:) surprised on the upside with gains. Kroger (NYSE:) reports later. And China’s inflation is easing under pressure from a weak economy, which is also weighing on global oil demand. Here’s what you need to know about the financial markets on Friday, September 9th.
1. Dollar correction
The dollar eventually corrected, falling 1% after a month-long rally that saw market participants continue to upgrade their forecasts for US interest rates.
Momentum reversed after the greenback failed to make fresh highs in response to (now well-known) hawkish comments from Federal Reserve Chair Jerome Powell, who told a Cato Institute event on Thursday: “We need to now act openly and decisively, as we have done, and we must keep at it until the job is done.”
The crosses were backed by the largest in its 23-year history, the European Central Bank, and a promise of more to come from its President, Christine Lagarde.
As of 06:10 ET, the , which tracks a basket of advanced economy currencies against the greenback, was down over 1.1% to 108.48.
2. Europe’s energy ministers meet for crisis talks
Energy ministers from across the European Union are meeting to slash cripplingly high electricity and natural gas prices ahead of the coming winter.
Hard decisions are unlikely given differences between different member states on how best to reduce demand and how to enforce the proposed price cap on the bloc’s remaining gas imports from Russia. Speaking ahead of the meeting, EU Energy Commissioner Kadri Simson said she expected progress towards a consensus, but warned plans might not be finalized until another meeting next week.
However, wholesale market prices continued their decline, with the benchmark falling 5.3% to €208.80 per megawatt-hour. Base load electricity prices have fallen about 20% in the last week.
3. US stocks expected to open higher; Eyeing Kroger result
US stock markets are likely to end the week higher for the first time in four attempts as sentiment strengthens after pricing in higher US interest rates.
As of 06:30 ET (10:30 GMT), they were up 231 points, or 0.7%, while they were up 0.8% and 1.1%.
Stocks to watch later include DocuSign, which is trading significantly higher in the premarket after finally issuing an update with improved forecasts, while cybersecurity firm Zscaler is also trading higher after late Thursday. Smith and Wesson (NASDAQ:) moves after a disappointing .
Kroger is the only big name scheduled to report on Friday.
4. China’s inflation continues to ease as the economy slows
China continued to offer the world a respite from inflation. Producer prices, which feed into (at least some of) export prices with some lag, rose just 2.3% year-on-year through August, the lowest in 18 months and well below analysts’ expectations.
CPI inflation also eased, with prices falling 0.1% over the month, bringing the annual rate down to 2.5% from 2.7%.
Chinese stock indexes rose as much as 1.7% as they extended their recovery against the dollar, gaining 0.5% after bouncing off a major support level at 7 against the dollar on Thursday.
5. Crude oil rallies as the dollar weakens
Crude oil prices rallied as the dollar weakened, taking pressure off non-dollar based importers around the world.
As of 06:30 ET (10:30 GMT), futures were up 1.7% to $84.94 a barrel, while rising 1.7% to $90.69 a barrel. However, both contracts are still on track for their lowest close in seven months as China’s Covid lockdowns weigh on sentiment again.
Consulting firm Energy Aspects expects Chinese oil consumption to fall by an average of 380,000 barrels a day this year for the first time since 2002. That’s partly because of the recent spate of outbreaks, which will affect next week’s Golden Week holiday, a time when hundreds of millions of Chinese travel.
Baker Hughes and CFTC data will round out the week later.
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