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Consumer Confidence in The U.S. Drops as Delta Variant Spreads, GBPUSD reaches 10-month Low & Natural Gas Prices Climb to 7-year High

U.S. Consumer Confidence drops to lowest in 7-months

Markets were trading erratically on Tuesday, as traders continued to panic due to increased volatility caused by both economic and environmental factors.

One of these factors was the news that consumer confidence in the United States fell to its lowest level in 7-months.

Figures from the Conference Board showed that its consumer confidence index fell to 109.3 in September, down from a reading of 115.2 last month.

💡 More on this
One of the key factors to this was the fact that job vacancies also rose, hitting a new high of 1.3 million in the quarter.

Today’s report is the third consecutive monthly decline in confidence, which comes as a result of the rapid spread of the Delta Variant.

As a result of the data, consumer confidence is now at its lowest since February, leading to the benchmark S&P 500 index falling by over 3% in today’s session.

This drop came as Gold prices also dropped, falling to an intraday low of $1,728.

GBPUSD falls to 10-month low

Currency markets weren’t exempt from today’s volatile trading session, with GBPUSD falling to its lowest level since January.

The move-in cable came as Treasury Secretary Janet Yellen confirmed that the economic recovery was slowing down.

Yellen stated that “While our economy continues to expand and recapture a substantial share of the jobs lost during 2020, significant challenges from the Delta variant continue to suppress the speed of the recovery and present substantial barriers to a vibrant economy”.

💡 The Delta Variant and its effect on the recovery
As fatalities rise with the now dominant delta variant, people are becoming weary of going out. Hospitality and leisure related industries have been the hardest-hit. Recovery in these areas will come at a slower pace

Many now wait to see what next week’s non-farm payrolls report will hold, with some expecting this to show over 500,000 jobs added to the economy.

GBPUSD hit an intraday low of 1.3523, after trading at a high of 1.3717.

Natural Gas prices climb to 7-year high

The energy crisis continued to worsen in today’s trading session, with the price of Natural Gas climbing to its highest level since 2014.

Prices have risen predominantly due to supply constraints caused on both sides of the Atlantic, leading to increased levels of demand.

In the United States, recent Hurricanes meant that several producers in the U.S. The Gulf of Mexico had to halt output, to prevent machinery from being adversely damaged.

💡 Global outlook for natural gas
Gas will be the strongest-growing fossil fuel and will increase by 0.9 percent from 2020 to 2035. It is the only fossil fuel expected to grow beyond 2030, peaking in 2037. From 2035 to 2050, gas demand will decline by 0.4 percent. This relatively moderate decline is due to hard-to-replace gas use in the chemical and industrial sectors, which limits the impact of an accelerating decline in gas used for power.

This led to a slowdown in supply, which still hasn’t fully recovered, whilst the crisis in Europe with Lorry drivers in the UK, also contributing to the inflated prices.

NGAS prices hit an intraday high of $5.06, its highest rate since February 2014, shares in Russian producer Gazprom climbed to 13-year highs.

Quote of the day –  “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

– Warren Buffet

Eliman Dambell

Senior Market Analyst