News

Dollar Rallies on Upbeat U.S. Economic Data

USD

The dollar index which measures the dollar strength against a basket of currencies rose to a two-week high of 95.02. The dollar rally started when the Federal Reserve raised interest rates by 25 basis point on Wednesday. The strong economic indicators provided additional support to the index. The final reading of the second quarter GDP settled at 4.2%, the fastest in four years, the GDP price index rose to 3.3%, and the durable goods orders increased by 4.5%. On the other hand, the concerns about Italy's budget weighed on the euro and boosted the dollar. The EURUSD tumbled to a ten-day low of $1.1632. Moreover, the dollar advanced to a nine-month high against the Japanese yen and the pair USDJPY traded at 113.64.

Equities

The Dow Jones and SPX500 ended a multiday losing streak as data improved confidence and risk appetite. The Dow Jones Industrial Average gained 0.2% to 26439, the SPX500 added 0.3% to 2914, and the tech-heavy Nasdaq Composite Index rose 0.7% to 8041.

Metals

Gold prices tumbled to a one-month low as the dollar strengthened. The gold bullion was able to break out of the trading range and close lower at $1182. Also, the silver ounce settled lower at $14.26.

Oil

Oil prices remain supported by the potential impact on supply from the sanctions on Iran’s oil export. The Brent futures are hovering near a four-year high, and the West Texas Intermediate futures are trading near a ten-week high. The Brent futures settled at $81.28, and the West Texas Intermediate crude futures closed at $72.17. The Kingdom of Saudi Arabia announced that it could increase production by 500 thousand barrels to offset the drop in Iranian production. However, the kingdom might have to reduce its production next year to balance the global supply and demand. The production in the United States is likely to rise by 2.4 million barrels per day in 2019, whereas the global demand could expand by 1.5 million barrels only. Therefore, producers should take actions to avoid excess supply which could lead to a fall in prices.

Major Economic Events

GMT Country Event Expectation Previous
7:55 EU German Unemployment Change (Sep) -9 -8
8:30 UK GDP (YoY) (Q2) 1.3% 1.3%
9:00 EU CPI (YoY) (Sep) 2.1% 2.0%
12:30 US PCE Deflator (YoY)   2.3%
12:30 CA GDP (YoY) 2.2% 2.4%
14:00 US Michigan Consumer Sentiment (Sep) 100.5 100.8
17:00 US U.S. Baker Hughes Oil Rig Count   866

 

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