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Dollar Trades Under Pressure as Safe Havens Dominate

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USD

On Wednesday, the Greenback fell against most of its major rivals, negatively affected by rising tensions with North Korea peninsula and by a Federal Reserve official statement about subdued U.S. inflation. The Greenback was traded under pressure after Federal Reserve Governor Lael Brainard said yesterday that the Federal Reserve may have to slow down the pace of interest-rate hikes given the recent low readings for inflation. Such comments may cast further doubt over the likelihood of another rate hike before the end of the year.

On the economic calendar for Wednesday, markets are awaiting ISM Services/Non-Manufacturing Composite index for August, which could hit 55.5 from 53.9.

  • The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.04% at 92.289 pips.

GBP

The Sterling pound rose as much as +0.05% vs. the Greenback, to settle at 1.3040 despite the Markit services index unexpectedly tumbled from 53.8 to 53.2. With no important UK data for today, the GBP exchange rate is most likely to react to construction, retail figures and German factory orders.

EUR

The single currency rose as much as +0.18% at $1.1935 vs. USD ahead of Thursday's ECB policy meeting. Traders are looking to see whether the ECB will send a new policy message on the timing of an exit from its ultra-loose monetary policy at the meeting.

JPY

The Greenback down against the JPY pushed back toward a recent 4-1/2-month low, amid heightened geopolitical worries over the Korean peninsula despite Japan's proximity to North Korea. The Japanese Yen, which traditionally acts as a safe-haven play when investors turn nervous, rose as much as 0.15%, to settle at $108.65.

Gold

Gold prices rose for a fifth straight day as geopolitical risks over North Korea remained high and as uncertainty over U.S. President Donald Trump's foreign policy. Gold Futures - Dec 17 fell as much as 0.08%, to settle at $ 1,343.45.

Oil

Earlier today, Crude oil prices edged down to levels seen before Hurricane Harvey with a first weekly data look at the impact of Hurricane Harvey but another storm could hit Florida and weigh on prices.

U.S. West Texas Intermediate crude jumped +0.14%, to close at a three-week high of $ 48.73, while Brent Oil Futures - Nov 17, fell as much as -0.06%, to settle at $ 53.35.

The most important economic events:

  • CAD Bank of Canada Rate Decision (SEP 06): (GMT 14:00) – Important – Forecast (0.75%) – Previous (0.75%).
  • USD ISM Services/Non-Manufacturing Composite (AUG): (GMT 14:00) – Important – Forecast (55.5) – Previous (53.9).
  • USD U.S. Federal Reserve Releases Beige Book: (GMT 18:00) – Medium.

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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