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The Greenback Awaits FOMC Meeting Minutes

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USD

On Wednesday, the Greenback managed to hold steady onto most of its gains made as solid U.S. retail sales data, which hit the largest gain in seven months, kept alive the chance of another interest rate hike by the U.S. Federal Reserve before the end of the year. Data for July showed that the U.S. retail sales unexpectedly rose by 0.6%, handily beating economists' estimates of a 0.4% reading, as consumers bought more motor vehicles and increased spending. Meanwhile, June business inventories, which is a key component of gross domestic product, rose 0.5% after an un-revised 0.3% the previous month.

On the release front, investors are awaiting, Minutes from the Fed's July meeting, as Focus will remain on the discussions on the timing of rate hikes and whether the Fed is likely to announce a decreasing in its balance sheet at its September meeting.

  • The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last down 0.06% at 93.49.

GBP

The Sterling pound drifted lower on Tuesday vs. the Greenback and the Euro after UK CPI inflation came in lower than expected in July, reducing the possibility of an imminent interest rate rise from the Bank of England. According to the Office for National Statistics, the annual rate of CPI inflation held at 2.6% in July, equal to June's figure.

On the economic calendar for Wednesday, investors are awaiting Jobless Claims Change for July, Average Weekly Earnings and ILO Unemployment Rate. Fundamentally, better than expected figures could drive the GBP higher.

The pound declined against the Greenback, trading 0.06% down, to settle at $1.2860

EUR

The common currency continued to take a few blows as economic data printed below expectations. The German Q2 GDP came in at 0.6% against the expected 0.7%. The area’s flash GDP is due today. If it prints lower than the expected 0.6% reading, then this will weigh in on the European Central Bank’s tapering expectations.

JPY

The Japanese currency stepped back as risk appetite improved in the markets forcing lower yielding currencies to retreat. On the economic data front, Japan’s industrial production increased to 2.2% from 1.6% against the anticipated no change. No major reports are due from Japan today, leaving market sentiment in charge of yen movements.

Gold

Gold prices settled earlier in the day as the Greenback fell slightly, with traders await Fed July meeting minutes for further clues on the outlook for interest rates. A dovish Fed statement could boost the yellow metal, as it is very sensitive to moves in U.S. rates.

Meanwhile, the yellow metal was negatively affected by better-than-expected U.S. retail sales data for July, after rising to 0.6%. Spot gold rose as much as 0.1%, to settle at $1,272.47, after falling for two consecutive days, while Gold Futures - Dec 17 fell as much as 0.30%, to settle at $1,275.80.

Oil

Despite growing concerns about oil demand, prices rose earlier today as U.S. crude inventories fell to three week lows. Official data showed Tuesday that the U.S. crude inventories fell by 9.2 million barrels in the week to Aug. 11 to 469.2 million.

On the data front, markets are awaiting the Official Energy Information Administration (EIA) data due today.

Brent crude futures (LCOc1) rose as much as 22 cents or 0.4%, to settle at $51.02, while U.S. West Texas Intermediate (WTI) crude futures (CLc1) edged up to $47.70.

The most important economic events:

  • EUR Italian Gross Domestic Product s.a. and w.d.a. (YoY) (2Q P): (GMT 08:00) – Important – Previous (1.4%) – Forecast (1.2%).
  • EUR Euro-Zone Gross Domestic Product s.a. (YoY) (2Q P): (GMT 09:00) – Important – Previous (2.1%) – Forecast (2.1%).
  • USD FOMC Meeting Minutes (JUL 26): (GMT 18:00) – Important

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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