Dollar Index Resumes Rally following Inflation Data


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The dollar index which measures the greenback against a basket of major currencies reversed earlier losses and headed to a fresh two-month high of 97.26. DXY gained support from the better-than-expected inflation data. The January Core Consumer Price Index YoY ticked higher towards 2.2% versus an expectation of 2.1%. Inflationary pressures were key drivers for the Federal Reserve to raise interest rates in 2018. Market participants shift their focus towards the retail sales data later today along with the high-level trade talks between China and the United States. The USDJPY climbed to a six-week high of 111.12, and the EURUSD tumbled towards a three-month low of $1.1249.


Gold prices retreated from a ten-day high of $1318 to end lower at $1306 as the dollar advanced along with US Treasury yields. The silver ounce dropped to a three-week low of $15.52, while palladium continued to hover above $1400.


Oil prices soared on optimism over trade talks between China and the United States, neglecting US inventory data. The two largest economies are holding high-level trade talks, trying to put an end for the ongoing trade war and strike a trade deal which could boost the global economy. Moreover, during the Asian session, the Chinese trade data pushed oil prices further. On the other hand, the Energy Information Administration reported that the US weekly crude oil inventories rose by 3.633 million barrels last week. The West Texas Intermediate crude futures climbed to a high of $54.57, and Brent futures jumped to an eleven-week high of $64.41. 

Major Economic Events

GMT Country Event Expectation Previous
10:00 EU GDP (QoQ) (Q4) 0.2% 0.2%
10:00 EU GDP (YoY) (Q4) 1.2% 1.2%
13:30 US Core Retail Sales (MoM) (Dec) 0.0% 0.2%
13:30 US Retail Sales (MoM) (Dec) 0.1% 0.2%
13:30 US PPI (MoM) (Jan) 0.1% -0.2%
13:30 US Initial Jobless Claims 225 234


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