Dollar Extends Gains amid Rising European Risk

Dollar Extends Gains amid Rising European Risk


The dollar index which measures the greenback against a basket of major currencies closed higher for the third consecutive day. DXY settled near a two-month high at 95.99. The Initial Jobless Claims fell to 210 thousand versus an expectation of 211 thousand, and the Philadelphia Fed Manufacturing Index settled at 22.2 versus an expectation of 19.7.


The Euro tumbled to a ten-day low against the United States dollar following the comments of the European Commission concerning the Italian budget draft. The Commission said that the planned government spending was too high, the deficit would rise, and the public debt would not be in line with the European Union rules. The Italian 10-year bond yields rose to 3.74% the highest since 2014, and the gap between the German and Italian 10-year bond yields widened to the largest in more than five years. The EURUSD traded at a low of $1.1449, and the EURJPY fell to a six-week low of 128.32.


The British Pound dropped to a two-week low against the United States dollar as Prime Minister Theresa May rejected the EU's proposal regarding the Irish borders. The meeting in Brussels failed to yield a Brexit deal, but the Chief European negotiator Michel Barnier said that they have a 90% chance of an agreement. The GBPUSD traded at a low of $1.3015, and the GBPJPY traded at a five-week low of 145.81.


Major U.S. indices finished the session lower with the Dow Jones losing more than 300 points on global growth concerns. The Chinese stocks traded at a four-year low to signal a possible slowdown in the global growth. The Dow Jones Industrial Average fell 1.3% to 25379, the S&P500 lost 1.4% to 2768, and the tech-heavy Nasdaq Composite Index dropped 2.1% to 7485.


Gold prices rebounded from a three-day low of $1219 to settle higher at $1226. The slide in the U.S. stocks boosted the demand for the precious metal as investors rushed to the safe haven amid rising risks and market uncertainty. The silver ounce bounced from a one-week low of $14.45 to trade at $14.66 during the Asian session.


Oil prices finished lower for the second consecutive day amid rising fears of a global economic slowdown. The West Texas Intermediate crude futures traded at a one-month low of $68.50 per barrel, and the Brent futures traded at a three-week low of $78.73 per barrel. The energy services firm Baker Hughes will report the U.S. oil rig count later today.

Major Economic Events

GMT Country Event Expectation Previous
12:30 CA Core CPI (MoM) (Sep) 0.1% 0.1%
12:30 CA CPI (MoM) (Sep) -0.1% -0.1%
12:30 CA Core Retail Sales (MoM) (Aug) 0.2% 0.9%
14:00 US Existing Home Sales (Sep) 5.30 5.34
15:30 UK BoE Gov Carney Speaks     
17:00 US U.S. Baker Hughes Oil Rig Count   869


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