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Yen weakens despite growth
Gold prices remained constrained by positive global equity markets reducing safe-haven demand and a recovering US dollar capping upside
China's Central Bank maintaining its one-year and five-year Loan Prime Rates at 3.35% and 3.85%, respectively
Gold prices remained range-bound around $2,500
WTI crude oil prices fell for the third straight day
Market Overview
Following a period of low volatility yesterday, the markets are experiencing a lackluster trading session today. China's Central Bank opted to keep interest rates steady during its monthly review, with the one-year Loan Prime Rate (LPR) held at 3.35% and the five-year LPR maintained at 3.85%. This decision was widely anticipated by market participants.
Australia's Monetary Policy:
In Australia, the Reserve Bank released the minutes from its recent meeting, revealing deliberations on a potential rate hike in August due to persistent inflation concerns. However, the central bank ultimately decided to leave the rate unchanged at 4.35%. The board expressed growing worries about the difficulty of reaching the inflation target by 2025.
Currencies
The Japanese yen has weakened significantly, with USD/JPY surpassing the 147.00 level. Despite this, expectations of a potential interest rate increase in Japan could limit further declines in the yen. Japan's economy demonstrated robust growth in the second quarter, with an annualized rate of 3.1%, exceeding expectations and supporting the Bank of Japan's efforts to achieve its inflation target.
Commodities
Gold prices continue to trade within a narrow range around the $2,500 mark, exhibiting a consolidative pattern for the second consecutive day. A positive sentiment in global equity markets is dampening demand for the safe-haven metal, while a slight recovery in the US Dollar is also capping its upside.
Oil
West Texas Intermediate (WTI) crude oil prices have been on a downward trend, declining for the third consecutive day and reaching a nearly two-week low. The commodity is currently trading below the mid-$73.00 range, down 0.40% amid optimistic developments regarding a potential ceasefire in Gaza, reducing concerns about broader Middle East conflicts and potential disruptions in oil supply from the region.
Investors appear cautious ahead of key events, including the release of the July FOMC meeting minutes and Fed Chair Jerome Powell's upcoming speech at the Jackson Hole Symposium, which are expected to provide further clarity on the Federal Reserve's monetary policy trajectory.
