Dollar Index Hovers near 18-month high on safe-haven demand

Dollar Index Hovers near 18-month high on safe-haven demand


The dollar index which measures the greenback against a basket of major currencies is trading near an 18-month high ahead of numerous economic releases. Last week, DXY rose to a fresh 2018 high of 97.71, trading slightly above November's high of 97.69. Market participants await the Federal Open Market Committee meeting where the Fed is widely expected to raise rates by 25 basis points for the fourth time this year.


Major US indices finished lower on Friday amid growing concerns over global growth. The weak economic data from China and Europe weighed on investors' risk sentiment. The Dow Jones Industrial Average lost 2.1% to 24082, the lowest close since May, the S&P500 futures fell 1.6% to 2602, and the Nasdaq futures declined 2.5% to 6607. Investors will be carefully following the press conference of the Federal Reserve chairman. Will Jerome Powell be able to ease investors’ woes and boost the stock market?


The Euro tumbled against peers on Thursday and Friday following slightly dovish comments from the ECB president and weak manufacturing and services PMI. Also, the ECB lowered the inflation and GDP growth projections for 2019. Investors are worried that the latest developments could force the ECB to maintain low rates beyond summer 2019.


Gold prices lost almost 0.8% last week to settle at $1238. The precious metal was pressured by the US dollar surge ahead of an anticipated rate hike. Meanwhile, the silver ounce held the previous week's gains and closed marginally lower at $14.55, while palladium closed higher for the third consecutive week at $1241.


Oil prices drifted lower to erase Thursday's gains and settle slightly lower for the week. The prices have been trading in a tight range since the OPEC+ meeting that took place on December 6. Market participants are afraid that the agreed supply cuts will not be enough to boost prices amid growing signs of a global economic slowdown. The West Texas Intermediate crude futures lost 3.1% to $51.20, and the Brent futures declined 2.2% to $60.27.

Major Economic Events

GMT Country Event Expectation Previous
10:00 EU CPI (YoY) (Nov) 1.0% 1.0%
10:00 EU Core CPI (YoY) (Nov) 2.0% 2.0%


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