Dollar Rises ahead of an Anticipated Rate Hike Next Week

Dollar Rises ahead of an Anticipated Rate Hike Next Week


The dollar index which measures the greenback against a basket of major currencies edged higher during the Asian session, supported by the weak performance of the European currencies. DXY rose 0.2% to 97.25, slightly below yesterday's high of 97.29. Market participants await the November Retail Sales data later today. Moreover, investors are looking forward towards the last Federal Reserve meeting this year that is happening on 18th and 19th of December. The CME Fed Watch Tool shows a probability of 76% of an interest rate hike by 25 basis points to 2.25-2.50%. The USDJPY traded at a ten-day high of 113.70, and the USDCAD rose 0.3% to 1.3386.


The Euro weakened against other currencies on a slightly dovish ECB. The European Central Bank left interest rates unchanged and confirmed that the QE program is to end this month. However, the bank lowered the 2019 inflation forecasts to 1.6% from 1.7% prior and the GDP growth to 1.7% from 1.8% prior. Moreover, Draghi addressed the risks to economic growth such as the geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility. The EURUSD tested a low of $1.1330, and the EURGBP fell to a four-day low of 0.8952.


Gold prices edged lower as the dollar regained strength. The gold ounce dropped to a one-week low of $1237 during the Asian session. Meanwhile, the silver ounce fell to $14.62, and palladium declined to $1248.


Oil prices edged higher on the expectations that the OPEC+ supply cut would be enough to boost prices and ensure a healthy market. The West Texas Intermediate crude futures rose 3.2% to $52.82, and the Brent futures added 2.4% to $61.63. The US energy services firm Baker Hughes will report the weekly US oil rig count later today.

Major Economic Events

GMT Country Event Expectation Previous
13:30 US Core Retail Sales (MoM) (Nov) 0.2% 0.7%
13:30 US Retail Sales (MoM) (Nov) 0.1% 0.8%
14:15 US Industrial Production (MoM) (Nov) 0.3% 0.1%
15:00 US Business Inventories (MoM) (Oct) 0.6% 0.3%
18:00 US/td> U.S. Baker Hughes Oil Rig Count   877.0


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