Markets monitor EU inflation after Fed minutes

The dollar kept its lead on Thursday, and Asian equities declined further, uninspired by Wall Street's attempt to pare losses after the Fed minutes. It appears that investors are closely monitoring the latest EU inflation data that is due to be released later in the session.

EU inflation

According to data released by Eurostat on Wednesday, the economic growth rate in the Eurozone for the second quarter was revised down from 0.7% to 0.6% quarter on quarter. It is expected that investors will focus their attention on the latest inflation estimates in the region. However, they are not likely to differ significantly from preliminary estimates. As a result, these figures were up 8.9% on the year in July, which is an increase of 0.1% monthly. 

As a result of a surge in consumer prices, the central bank of Norway is expected to raise the interest rate on its benchmark borrowing rate by 50 basis points today, which is greater than what it was expected to do in June.

Gold

There are mixed signals about the future of US monetary policy on Thursday, which can keep gold prices within a tight range. There was a dramatic fall in the market after the minutes of the Federal Reserve's July meeting showed that most members supported an increase in interest rates to bring down inflation. Even though the Federal Reserve intends to eventually reassess its tightening pace, it is likely to continue raising rates at a sharp clip until inflation is well within its target range of 2%, which it intends to reach by the end of the year. It would seem that the Fed is not opposed to dollar strength, and there are no links between dollar strength and a depressive state of the US economy in any of the sectors.

It is estimated that about 39% of traders expect the Fed to hike rates for the third time in a row by 75 basis points in September. They will probably hover around until mid-2023 when rates peak at about 3.7%.

Oil

On Thursday, oil prices have remained relatively stable, at 93 dollars a barrel for brent oil, as investors grappled with falling stockpiles in the United States, rising production from Russia and concerns about a potential global recession.

In recent months, oil futures have fallen as investors have pondered economic data that has sparked fears of a recession. Although recession fears are well known, it is challenging to find bullish catalysts such as the return of China or the degradation of Russian supply that can spur an economic recovery. Due to COVID-19 lockdowns and fuel export controls, China's refining output was lacklustre in July.

Following sanctions-related curbs and increased Asian buyers' purchases, Russia has gradually increased oil production, leading Moscow to raise its forecasts for output and exports until 2025.