Investing.com - Here are the top five things you need to know in financial markets on Tuesday, August 16:
1. Dollar crashes to 8-week lows ahead of key U.S. data
The U.S. dollar crashed to the lowest level in nearly eight weeks on Tuesday, as the market adjusted to a view that the Federal Reserve will leave interest rates unchanged for the rest of the year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, sank to 94.76, a level not seen since June 24. It was last at 94.80 by 5:55AM ET (09:55GMT), down 0.85% on the day.
Fed funds futures are currently pricing in just a 9% chance of a rate hike by September. December odds were at around 42% as a recent string of unexpectedly weak economic data led investors to push back expectations for the next U.S. rate hike.
Against the yen, the dollar slumped to a five-week low of 100.08 before trimming losses to 101.10, down more than 1%.
The euro, meanwhile, climbed to a seven-week peak of 1.1277 against the dollar before falling back to 1.1272, up 0.8%.
Investors looked ahead to key U.S. data later in the session to further gauge the health of the world's largest economy and whether it is strong enough to warrant an interest rate hike later this year.
The Commerce Department will publish July inflation figures at 8:30AM ET (12:30GMT) Tuesday. Market analysts expect consumer prices to inch up 0.1%, while core inflation is forecast to increase 0.2%.
On a yearly base, core CPI is projected to climb 2.3%. Core prices are viewed by the Federal Reserve as a better gauge of longer-term inflationary pressure because they exclude the volatile food and energy categories. The central bank usually tries to aim for 2% core inflation or less.
Rising inflation would be a catalyst to push the Fed toward raising interest rates.
Besides inflation, the U.S. is to produce reports on housing starts and building permits at 8:30AM ET (12:30GMT), while industrial production and capacity utilization are due at 9:15AM ET (13:15GMT).
2. Oil rises to fresh 5-week highs as OPEC-rally continues
Oil prices rose again on Tuesday, extending an impressive three-day rally which boosted prices by nearly 10% amid indications major oil producers are reconsidering a collective production freeze in a bid to boost the market.
U.S. crude was up 31 cents, or 0.68%, at $46.05 a barrel during morning hours in New York, while Brent tacked on 28 cents, or 0.58%, to $48.63 a barrel.
Oil prices are up nearly 10% over the past three trading sessions. The rally started last Thursday after Saudi Arabia’s energy minister said the country would work with other oil producers to stabilize prices at a meeting in Algeria next month.
Russian Energy Minister Alexander Novak said on Monday his country is opening up to an agreement with other major oil producers to cap output "if necessary" to achieve market stability.
However, market players remained skeptical that the meeting would result in any concrete actions.
3. Global stocks mostly lower as markets keep an eye on oil, dollar
U.S. stock index futures pointed to a marginally lower open Tuesday morning, one day after closing at all-time highs, as investors looked ahead to a fresh batch of corporate earnings reports and U.S. economic data, while keeping an eye on oil prices and dollar movements.
Meanwhile, European and U.K. stocks were down modestly in mid-morning trade Tuesday, as gains in the oil market kept the decline somewhat in check.
Earlier, Asian shares closed mixed, with Japan's Nikkei 225 leading losses due to a surging yen.
4. U.K. inflation gets post-Brexit boost
U.K. consumer prices rose more than forecast in July, as the fall in sterling in wake of the Brexit vote pushed up import prices, creating inflation pressure ahead.
The U.K. Office for National Statistics said the rate of consumer price inflation increased by 0.6% last month, the biggest rise since November 2014 and above forecasts for a gain of 0.5%.
Meanwhile, input costs surged an annual 4.3% last month, ending 32 consecutive declines, while import prices jumped the most since 2011.
The upbeat data lifted the pound to a daily high of 1.2994 against the dollar. It was last at 1.2984, up 0.8% (GBP/USD).
5. BHP Billiton records worst loss in its history
BHP Billiton (LON:BLT), the world's largest mining firm by market value, reported a record $6.4 billion annual loss on Tuesday, hammered by a bad bet on shale, a dam disaster in Brazil and a commodities slump. The mining giant also cut its final dividend by 77%.
Even excluding $7.7 billion in writedowns and charges, underlying profit slumped 81% to $1.2 billion, hit by weak iron ore, copper, coal, oil and gas prices.