Optimism returns as recession fears fade

What to watch out for on Friday, August 16:

The US dollar dipped between gains and losses to end the day mixed on the foreign exchange level after data from the United States (US) brought relief. Speculative interest eased concerns about a potential recession in the world’s largest economy following the release of healthy employment figures and upbeat retail sales. Other numbers were less encouraging but failed to revive concerns or dent the chances of a rate cut in September.

Stocks made the most of it as Wall Street extended its gains to new weekly highs, with the three major indexes holding on to substantial gains at the end of the day.

The Euro lost the 1.1000 mark against the US Dollar to settle around 1.0970, while GBP/USD managed to end the day around 1.2860 as the Pound Sterling found support in the data local. Britain’s Q2 Gross Domestic Product (GDP) showed the economy grew by 0.6% in the three months to June, as expected. In addition, manufacturing output rose 1.1% month-on-month in June, beating expectations.

The safe-haven CHF and JPY edged lower against the US dollar, but commodity-linked currencies such as the AUD and CAD held at familiar levels as gains in equities partially offset USD strength.

Gold managed to pare intraday losses and regained the $2,450 mark before the US close.

On Friday, there will be speeches from the governors of the major central banks. Reserve Bank of Australia (RBA) Michele Bullock is set to testify before Congress alongside other policymakers, while Reserve Bank of New Zealand (RBNZ) Adrian Orr is set to speak on monetary policy at an event hosted by the Chamber of Commerce Wellington.

Later in the day, the United Kingdom (UK) will release July retail sales, while the United States (US) will release its preliminary estimate of Michigan’s August consumer sentiment index and Michigan’s consumer inflation expectations for the same month.