News

Dollar Falls ahead of Fed Meeting

USD

The dollar index which measures the greenback against a basket of major currencies retreated from an eighteen-month high of 97.71 reached on Friday, to trade below 97 during today's Asian session. Market participants are speculating that the Federal Reserve will be forced to pause the monetary policy tightening due to the economic slowdown. The CME FedWatch tool showed that the probability of an interest rate hike of 25 basis points tomorrow dropped from 78% to 69%. Several economic indicators are signaling that the economic activity is slowing down. The December Empire State Manufacturing Index dropped to 10.90, the lowest since July 2017. Moreover, the Home Builders sentiment declined to the lowest in more than three years. The USDJPY lost almost 0.6% to 112.50, and the USDCHF tumbled 0.5% to 0.9930.

Equities

Major US indices ended sharply lower on Monday on growing concerns over global growth. Also, investors are worried that the Federal Reserve could raise interest rates for the fourth time this year amid signs of an economic slowdown. The Dow Jones Industrial Average futures lost 1.3% to 23714, the S&P500 futures declined 1.5% to 2552, and the Nasdaq futures dropped 1.6% to 6493.

Metals

Gold prices edged higher as the dollar weakened. The gold ounce rose 0.6% to $1245. Meanwhile, the silver ounce advanced 0.7% to $14.64, and palladium jumped 1% to $1255.

Oil

Oil prices ended lower for the second consecutive day amid rising signs of a global economic slowdown. Market participants are afraid that the recent OPEC+ supply cut agreement will not be enough to boost prices. The West Texas Intermediate crude futures tumbled 3.8% to a fourteen-month low of $49.13, and the Brent futures plunged 2.6% to $58.69. The American Petroleum Institute will report the US weekly crude oil stock later today.

Major Economic Events

GMT Country Event Expectation Previous
9:00 EU German Ifo Business Climate Index 101.8 102.0
13:30 US Building Permits (Nov) 1.259 1.265
21:30 US API Weekly Crude Oil Stock   -10.18

 

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