The dollar index which measures the greenback against a basket of major currencies recovered slightly from yesterday’s losses as investors shifted to their focus towards the trade meeting that will take place today between the Chinese President Xi Jinping, the United States Trade Representative Robert Lighthizer and Treasury Secretary Steven Munchin. The greenback was volatile during the past two days. On Wednesday, the strong inflation figures boosted the demand for the dollar and raised the chances of an interest rate hike in 2019. However, yesterday the December Retail Sales figures showed the weakest drop since 2009 which weighed on the dollar and the Treasury yields. DXY is trading near 97.15, the US 10-year Treasury yields dropped to 2.64%, and the USDJPY tumbled to a low of 110.25.
The British Pound weakened against major currencies weighed down by further Brexit uncertainty. The House of Commons voted down three amendments yesterday. The UK lawmakers voted down the government motion to reaffirm support for May’s plan. The leader of the Labour Party Jeremy Corbyn said that PM May should bring a coherent plan and admit that her strategy has failed. On the other hand, May’s office said that voting against the government will make “no-deal” Brexit scenario more likely. Market participants are awaiting the meeting between Corbyn and the EU’s Chief Negotiator Michel Barnier this weekend. The GBPUSD dropped to a one-month low of $1.2772, the GBPJPY tumbled to a three-week low of 141.06, and EURGBP tested a three-week high of 0.8840.
Metals prices surged as the dollar weakened along with the US treasury yields after weak retail sales data. The gold ounce bounced off a two-week low of $1302 to trade at a high of $1315. The silver ounce rose from a three-week low of $15.48 to a high of $15.62, and palladium tested a one-month high of $1422.
Oil prices finished higher for the third consecutive day amid rising optimism over a trade deal between China and the United States. The ongoing optimism was enough to offset the effects of the weak retail sales data which hint to a slowdown in the US economy. The West Texas Intermediate crude futures traded at a ten-day high of $54.94, and Brent futures jumped to a three-month high of $65.08.
Major Economic Events
|9:30||UK||Retail Sales (MoM) (Jan)||0.2%||-0.9%|
|9:30||UK||Core Retail Sales (MoM) (Jan)||0.2%||-1.3%|
|14:15||US||Industrial Production (MoM) (Jan)||0.1%||0.3%|
|14:15||US||Manufacturing Production (MoM) (Jan)||0.1%||1.1%|
|18:00||US||U.S. Baker Hughes Oil Rig Count||854|
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