Dollar Falls as Brexit-Deal Hopes boost European Currencies

Dollar Falls as Brexit-Deal Hopes boost European Currencies


Wall Street finished mostly lower as the tech sector logged its worst day since July. Facebook and Twitter executives testified about online misinformation in Capitol Hill. The tech-heavy Nasdaq Composite fell by 1.2% to settle at 7995, the SPX500 lost 0.3% to 2888, whereas the Dow Jones closed marginally higher at 25974. On the other hand, the U.S. indices remain exposed to the trade-related titles as the public comment period on possible U.S. tariffs on another $200 billion worth of Chinese products ends today. Moreover, market participants are monitoring the trade talks between the United States and Canada as a trade deal could boost stocks.


The dollar index which measures the greenback against a basket of major currencies fell from a two-week high of 95.66 to settle lower at 95.10. Germany announced that it is ready to drop key Brexit demand in order to make it easier to reach a deal. The news sparked a round of dollar selling and supported European currencies. The GBPUSD spiked to a high of $1.2983, and the EURUSD jumped to a high of $1.1640 following the news. On the other hand, the trade balance deficit of the United States rose by ten percent in July from $45.70 billion to $50.1 billion. Market participants will focus on the ADP employment change that is due today, and the August job report tomorrow.


The Canadian dollar remains under pressure as the United States and Canada failed to reach a trade deal till now despite the positive remarks from both sides. On the other hand, the Bank of Canada kept interest rates unchanged at 1.50%. The market was pricing in a “no change” in the monetary policy. The bank addressed the risks from emerging markets and confirmed that gradual rate hikes could continue as long as supported by strong economic data. The USDCAD is trading in a tight range between 1.3160 and 1.3206.


Gold prices rose from a two-week low as the dollar rally eased. The gold ounce settled higher at $1196. On the other hand, the silver ounce held steady near $14 level, the lowest since January 2016.


Oil prices ended lower for the second consecutive day despite the drop in crude inventories. The American Petroleum Institute reported that the U.S. weekly crude stock fell by 1.2 million barrels last week. The West Texas Intermediate crude futures closed lower at $68.61per barrel, and the Brent futures settled at $77.05 per barrel. Oil demand could slow as the emerging market crisis threaten the global economy. The Energy Information Administration will report the crude oil inventories later today.

Major Economic Events

GMT Country Event Expectation Previous
12:15 US ADP Nonfarm Employment Change (Aug) 188 219
12:30 US Initial Jobless Claims 214 213
14:00 US ISM Non-Manufacturing PMI (Aug) 57.0 55.7
15:00 US Crude Oil Inventories -1.294 -2.566

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