|Day's Range||94.43 - 94.88|
|52 Week Range||94.43 - 98.67|
Despite trade tensions, the U.S. economy is booming. The same can't be said for the rest of the world. Yahoo Finance's Alexis Christoforous, Andy Serwer and Pras Subramanian.
According to reports, the allied partners led by Saudi Arabia and Russia will aim to increase production to about 1 million barrels per day (bpd). However, reports went on to say that this figure represents about two-thirds of Saudi Arabia’s initial request.
It’s a busy day ahead on the economic calendar, though it’s likely direction through the day will likely remain hinged on possible impact of a trade war.
The Philly Fed report said business activity fell from 34.4 in May to 19.9 in June, its lowest since November 2016. The index’s sharpest drop since January 2014.
The BoE just got more hawkish and economic data out of the U.S caught the markets by surprise, with the continued threat of a trade war playing its part through the day.
U.S. Commerce Secretary Wilbur Ross tried to calm nerves by explaining President Trump’s reasoning behind the tariffs. He said the White House is attempting to reach a deal on greater American access to Chinese markets and narrow its trade surplus with the United States.
Market risk appetite returns through the morning, with policy divergence continuing to favor the U.S Dollar. Direction for the majors will be hinged on noise from the Oval Office and Central Bank member commentary through the day.
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures closed lower on Tuesday as investors continued to express concerns over a possible increase in OPEC crude supply. Also pressuring prices were the escalating trade dispute between the United States and China.
The global financial markets responded to tariffs on $200bn worth of China imports into the U.S and China’s promise to respond, both sides seemingly unwilling to back down. If Trump wanted a weak Dollar, a trade war is not the way.
Is the trade war on? Following China’s response to the U.S tariffs on China exports to the U.S, it could get ugly, with Trump’s first tweet of the week likely to have a material bearing of risk sentiment through the week.
The Fed voted to raise its benchmark interest rate for a second time this year. The European Central Bank (ECB) revealed its plan to exit from quantitative easing (QE), but also said it’s not likely to raise interest rates until July 2019. The BOJ voted to maintain its ultra-loose monetary policy and downgraded its view on inflation, signaling that it will lag well behind its U.S. and European peers in rolling back crisis-era stimulus
The markets were mixed through the early part of the day, the introduction of tariffs having a mixed impact on the markets, with the Yen finding little support ahead of what will likely be a noisy day ahead for the Oval Office.
With the US interest rates gradually on the rise, we can observe an aggressive approach that makes the officials be more urgent for a tighten policy.
It’s a busy time for the markets, with focus shifting to today’s inflation figures out of the UK and the ECB Press Conference later today, positioning coming in the wake of FED rate hike on Wednesday.
According to the U.S. Labor Department, producer prices increased more than expected in May, producing the biggest annual gain in nearly 6 ½ years, but underlying producer inflation remained moderate.
The Fed also continued to suggest it would allow inflation to run a little hot, above its 2 percent inflation target before putting on the brakes with additional rate hikes.
Market players are unlikely to be overly surprised if the Federal Reserve raises US interest rates by another 25 basis points this afternoon, as this has been widely expected by many.
According to Bloomberg, the FED Chairman Jerome Powell took central bank’s “dot plot” as a guide to apply future interest rates. On the other hand, Wall Street might not be so affected by the Fed’s policy.
While there’s plenty of chatter on trade, Brexit, Italy and North Korea, focus will be on the FED later in the day, a rate hike largely priced in, with inflation numbers out of the UK also there to provide direction for the GBP.
Following some weak stats out of the Eurozone, the EUR maintained its position through the morning, on expectations of a hawkish ECB, with today’s inflation numbers likely to hit the Dollar should they impress.
The historic face to face meeting in Singapore of President Donald Trump and Kim Jong Un sparked the US dollar to jump up to a 3 week high.
Based on the early price action, the direction of the June U.S. Dollar Index this week is likely to be determined by trader reaction to the Fibonacci level at 93.36.
It was a cautious Asian session ahead of tomorrow’s Summit and, while there are some material stats out of the UK that will provide direction for the Pound, it’s quiet elsewhere, leaving the markets little else to focus on but Trump.
The Australian Dollar rose sharply early in the week, but the rally faded as investors reacted to not so friendly domestic economic data, trade war fears and the upcoming interest rate hike by the Fed.
Based on the close and the price action on Friday, the direction of the U.S. Dollar Index on Monday is likely to be determined by trader reaction to the 50% level at 93.545.