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U.S. Dollar Awaits U.S. Data

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USD

On Tuesday, the Greenback slipped vs. a basket of major currencies and to a six-week low vs. the yen due to uncertainty on the U.S. political front and worries over whether there will be another Federal Reserve rate hike before the year-end.

  • The dollar index rose as much as 0.1%, to settle at 92.907, its weakest level since 3rd May, 2016.

Also on the economic calendar, investors are awaiting ISM Manufacturing index, which is based on surveys of more than 300 manufacturing firms by the Institute of Supply Management and monitors employment, production, inventories, new orders and supplier deliveries. The index is expected to decline to 56.4 from 57.8.

As no Fed meeting is scheduled this month, traders will depend on the U.S. economic data for dollar. Any data that indicates uncertainty over the Fed’s ability to hike rates before the year-end will be bearish for the Greenback vs. other major currencies.

EUR

Earlier today, the Greenback recovered slightly from a 2-1/2 year low vs. the single currency, as traders consolidated positions after Eurozone inflation data are widely expected, but its outlook remained overshadowed due to US political turmoil. EURUSD fell as much as 0.1%, to settle at $1.1730. Over the Eurozone, the market is awaiting Eurozone Gross Domestic Product (GDP) for the second quarter, which is the measuring of the total value of services and goods produced by Eurozone nations.

GBP

Following the release of the June PMI and the Bank of England decision, the Sterling Pound has held rather steady. The data released yesterday turned out favorable with the net lending to individuals rising from 5.6 billion while mortgage approvals held steady at 65k. Today, we have Nationwide HPI on tap, in addition to the manufacturing PMI which may recover to 54.4 from 54.3.

JPY

Despite strong economic data from the Japanese economy, the dollar held steady at ¥110.30, trading near a low of ¥110.21 touched this week, its lowest level since mid-June. Preliminary Industrial Production gained 1.6%, this was well-above the previous -3.5% read, while Housing Starts rose as much as 1.7%, compared to a reading of -0.3% in May. These figures confirm a stronger Japanese economy.

Gold

Gold prices rose yesterday to $1,267.4, its highest in almost seven weeks, supported by a weak dollar and U.S. economic data that cast worries on whether the Federal Reserve will hike rates again before the year-end. Technically, the yellow metal is unlikely to fall in the short term amid global political tensions and as the Trump administration struggles to deliver on its economic agenda, which includes tax-reform.

Oil

Earlier today, U.S. oil traded above $50 per barrel for the first time since late May, on strong demand for fuel, but ongoing high supplies from producer OPEC kept prices from increasing further.  

Brent crude futures rose as much as 0.1 % or 6 cents to settle at $52.78 per barrel, while U.S. West Texas Intermediate (WTI) crude futures increased by 0.2% or 9 cents to settle at $50.26, the highest level in about two months. Technically, the prices could hit new high as The U.S. government is discussing sanctions against Venezuela’s oil industry. The Gulf Coast refineries will have to search for alternative sources promptly, if the U.S. government stops importing Venezuelan oil, as this will cause a severe shortage of heavy rude.

The most important economic events:

  • EUR Euro-Zone Gross Domestic Product s.a. (YoY) (2Q A): (GMT 9:00) – Important – Forecast (2.1%) – Previous (1.9%).
  • USD Personal Consumption Expenditure Core (YoY) (JUN): (GMT 12:30) – Important – Forecast (1.4%) – Previous (1.4%).
  • USD ISM Manufacturing (JUL): (GMT 12:30) – Important – Forecast (56.4%) – Previous (57.8%).

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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