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US dollar Extends gains as Trump leaves the Nuclear Deal

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USD

The Dollar index rose yesterday as US 10-year yields approached the three percent level and president Donald Trump pulled out from the International Nuclear Deal with Iran. In addition, the US economy continues to show strength, allowing the Federal Reserve to raise interest rates further more. The dollar traded at fresh 2018 highs after Chairman Powell said ”the markets shouldn’t be surprised by our actions if the economy evolves in line with expectations.” Producer Price Index is due today.

GBP

The British pound fell to four-month low on Tuesday against the US dollar as investors await for the Bank of England to keep interest rates unchanged tomorrow. The Halifax House Price Index for April was released yesterday and came out weaker than expected adding pressure to the currency.

NZD

The Reserve Bank of New Zealand will be meeting today and the market expects that the interest rates will remain unchanged. The New Zealand dollar weakened more than five percent against the US dollar since mid-April due to the soft economic data and dollar strength.

Gold

The precious metal traded under pressure due to some renewed selling pressure and is currently placed at fresh session declines, around the $1,305 levels.

Oil

Oil prices edged higher by more than 2% yesterday, with U.S. West Texas Intermediate (WTI) hitting a three-and-a-half-year high year high, after President Donald Trump announced that the United States will withdraw from the 2015 Iran nuclear deal and announced the "highest level" of sanctions on Iran OPEC member amid an already strict market. Brent crude oil futures at one point topped their highest levels since November 2014. In 2016, Iran re-emerged as a major oil exporter  after international sanctions against it were canceled in return for holding its nuclear program, with its April exports touching 2.6 million barrels per day (bpd). Such announcement means that the United States will likely re-impose sanctions against Tehran after 180 days, unless some other agreement is reached before then.

The most important economic events:

GMT Country Event Expectation Previous
7:30 UK Halifax House Price Index (YoY) (Mar)  2.1% 1.8%
12:15 CA Housing Starts (Mar) 220 229
13:00 EU ECB's Constancio Speaks    
14:30 CA BoC Business Outlook Survey    
16:45 EU ECB's Praet Speaks    

 

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