Forex

As investors concentrated on the Federal Reserve's strong hawkishness and the nation's increasing inflation, the US dollar index remained steady near $109 with the unchanged interest rate at 2.5%. Besides, the 0.2% fall in the inflation rate kept backing the recent uptrend of the dollar against the Euro, British Pound, Japanese Yen, and other major currencies. inflation, with gasoline and food prices dropping.

Eurozone had suffered higher inflation in food and energy costs, pushing the euro below parity the US dollar on August 14. European Central Bank had been dovish and indicated a further hike in inflation in upcoming months, putting the euro under pressure throughout the month. However, ECB is committed to controlling inflation with higher interest rates.

Besides euros, British Pound also dealt with various issues, including political change and inflation. The economic outlook has worsened, making it more difficult for the Bank of England to control price pressures. However, European Central Bank is committed to maintaining inflations with higher interest rates.

The Reserve Bank of Australia (RBA) has raised interest rates from 1.85% to 2.35%. The Bank of New Zealand (RBA) and Bank of Canada (BoC) followed the same strategy: raising the interest rate to counter soaring inflations.

Asian markets remained bearish as Japan’s Nikkei 225, Hong Kong's Hang Seng, and China’s Shanghai suffered losses until August 31. The Japanese Yen encountered a 4.23% loss against US Dollar at the end of the month.

Commodities

Most commodities suffered losses during this summer. The oil price dropped 30% from the beginning of June to mid-August. Gasoline price in the US has decreased by 20%. At present, gasoline costs $4 per gallon in the country.

In agriculture, wheat producers suffered a rise in production costs following the increase in Oil prices. Harvesting and fertilizer machinery run on diesel, and Natural gas will keep grain prices rising.

Actual interest rates are also projected to increase as the US Federal Reserve and other central banks tighten monetary policy. Not simply because a recession is more likely because of high- interest rates, but also because of this, commodities prices will surely decline. Both theoretically and experimentally, real interest rates have an impact on commodity prices irrespective of GDP.

Apart from Energy and Agricultural commodities, Metal prices also sharply declined following the overall downtrend starting in early June. Gold price dropped by 3.11%, and Silver price performed even worse by losing 11.64% within August.

Indices

On our list of eight global indexes to watch, one showed advances through August 29, 2022. The best-performing index is London's FTSE 100, which has gained 0.58% year so far. The BSE SENSEX in India is in second place with a loss of 0.48%, and the Nikkei 225 in Tokyo is in third place with a loss of 3.17%. Germany's DAX, which has lost 21.38% YTD, is last.

The S&P 500 fell 39.55 points, or 0.8%, to finish the month down 4.2%. On Wednesday, ten of the S&P 500's 11 sectors were down, with communication services the only sector to gain ground, nudging up one-hundredth of a percent.

The Industrial Average of Dow Jones dropped 280.44 points or 0.9%, reaching 31510.43, which resulted in a 4.1% decrease in the blue-chip index in August. Besides, the Nasdaq Composite, which has a significant tech component, lost 66.93 points, or 0.6%, to 11816.20, bringing its monthly decline to 4.6%.

Economic Events

Regarding economic events, September will be a crucial month for investors and market speculators. The Fed, ECB, RBA, and BOJ will publish their fresh decisions on interest rates this month. Apart from non-farm employment and unemployment rates, US Dollar may turn highly volatile following the FOMC Statement and Federal Funds Rate to be published on 22nd September.