On Friday, the greenback rose vs. the yen ahead of a meeting of the world's most powerful central bankers in Jackson Hole, as many traders believe that comments by Yellen and Draghi could provide volatility for the dollar.
Fed Chair Janet Yellen is due to give a speech at 14:00 GMT, European Central Bank president Mario Draghi will speak at 19:00 GMT.
In terms of data, U.S. existing home re-sales unexpectedly declined in July to an 11-month low, reducing optimism over the health of the U.S. housing market. The industry data showed that home re-sales unexpectedly fell by 1.3% in July from 5.51 million units in June. However, data published by the Labor Department on Thursday revealed that the number of Americans filing for unemployment benefits rose less than expected last week. Initial claims for state unemployment benefits rose by 2k to a seasonally adjusted 234k for the week ended Aug. 19, indicating further tightening in labor market conditions.
The common currency treaded quite carefully in yesterday trading sessions in anticipation of Mario Draghi’s speech at the banker’s conference in America. One segment of traders believe clues will be dropped about tapering whilst the other believe the speech will disappoint. In terms of the economic calendar, we have the German Ifo business client index and the country’s final GDP readings due.
The United Kingdom’s GDP estimate printed results in line with expectations with no changes from the 0.3% figure. The preliminary business investment showed unchanged reading for the quarter, which was lower than the predicted 0.2% increase. In addition, the CBI realised sales slipped to -10 from 22 instead of decreasing to 15. No reports are due from the British economy today.
Despite Japan’s core consumer price index rising as much as 0.5% for a seventh consecutive month in July from a year earlier, the U.S. dollar rose vs. JPY as risk appetite kicked in and profit taking took place ahead of the speeches at Jackson Hole.
Gold prices declined yesterday, hampered by a strong dollar with many analysts and traders keeping a watchful eye on the meeting of central bankers in Jackson Hole for cues on further interest rate hikes, which would eventually derive demand for the non-yielding yellow metal.
Meanwhile, diverging factors, like concerns over the US President Donald Trump's recent comment to shut down the government, and a modest uptick in the US Dollar, coupled with improving investors’ appetite for riskier assets - like equities, has failed to provide any fresh impetus to the precious metal.
Technically, gold could trade higher and set a new high for the year so far, if Fed Chair Janet Yellen indicates that Fed may not need to hike rates much more. Earlier today, Gold Futures - Dec 17 rose slightly by 0.1%, to settle at $1,292.17.
Earlier today, Oil prices edged higher as the U.S. petroleum facilities prepared for potential output cut as Hurricane Harvey, which quickly developed in the Gulf of Mexico, headed for the heart of the nation’s oil industry in the Gulf of Mexico. The US National Hurricane Center (NHC) announced on Friday that the hurricane Harvey has strengthened further, turning out to be potentially the biggest hurricane to hit the US mainland in more than ten years, with life-threatening floods expected along the Gulf Coast. Energy companies shut coastal refineries and halted onshore drilling in south Texas already on Thursday. Hence, both crude benchmarks remain underpinned so far this Friday amid potential supply disruption concerns. According to the U.S. Energy Information Administration, the U.S. Gulf of Mexico is home to about 17% of the nation’s crude output and 5% of dry natural gas output.
Crude Oil WTI Futures - Oct 17 rose as much as 0.72%, to settle at $47.77, while Brent Oil Futures - Oct 17 settled at $ 52.44.
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