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U.S. Dollar Boosted by Solid Producer Price Data

James Hyerczyk

The U.S. Dollar rose to its highest level since November 14 against a basket of currencies on Tuesday as investors reacted to stronger than expected economic data and a widely expected Fed rate hike on Wednesday.

Investors were also preparing for the results of the election between controversial Republican candidate Roy Moore and Democrat Doug Jones. A win by the Democrat will cut the Republican’s Senate majority from 52 to 51 and put at risk several of President Trump’s economic plans.

March U.S. Dollar Index futures settled at 93.70, up 0.23 or +0.25%.

Daily March U.S. Dollar Index

U.S. Economic News

U.S. producer price data showed an increase in wholesale inflation, increasing hopes that price pressures may be rising from sluggish levels. According to the Labor Department, the producer price index for final demand increased 0.4 percent last month. The number met economist expectations.

Core PPI was up 0.3%, beating the 0.2% forecast, but coming in lower than the previous month’s 0.4% read.

In other news, the NFIB Small Business Index came in at 107.5, exceeding the 104.6 forecast and 103.8 previous read. The Federal Budget Balance deficit grew more than expected at -138.5 billion versus a -135.2 billion forecast.

Daily February Comex Gold

Gold

Gold futures retreated to its lowest level since July 14 on Tuesday as investors prepared for a widely expected U.S. interest rate hike on Wednesday. The Federal Open Market Committee’s monetary policy statement will also be closely watched for clues about further hikes from the Federal Reserve.

Daily February Brent Crude

Crude Oil

International-benchmark Brent crude oil surged to a 2 ½ year high on Tuesday then plunged as traders took profits after prices soared on an unplanned closure of the pipeline that carries the largest North Sea crude oil grade.

Selling pressure increased after the U.S. Energy Information Administration said its monthly short-term energy outlook that U.S. crude oil output will rise by 780,000 barrels per day (bpd) to 10.02 million bpd in 2018. Last month, the EIA expected a 720,000 bpd year-over-year increase to 9.95 million bpd.

Daily March E-mini Dow Jones Industrial Average

U.S. Equity Markets

U.S. stock indexes finished mixed on Tuesday with the Dow and S&P 500 finishing higher and the NASDAQ closing lower. The rally was fueled amid growing optimism that Republican lawmakers would be able to reform the corporate tax system, a move that would be benefit banking stocks.

The Dow posted intraday and closing record highs, led by strong gains in Boeing and Verizon. The S&P 500 also posted intraday and closing all-time highs, with telecommunications and financials underpinning the index.

 

This article was originally posted on FX Empire

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