Dollar Slips on Improved Risk Sentiment; Stocks Soar

Dollar Slips on Improved Risk Sentiment; Stocks Soar


The Dollar Index which measures the greenback against a basket of major currencies settled lower for the first time in nine days. DXY lost 0.4% to close at 96.70 as investors jumped into riskier assets amid optimism over trade between China and the United States. Market participants will shift their focus today towards the inflation figures from the United States ahead of the High-level trade talks tomorrow. The EURUSD bounced off a three-month low of $1.1257 to trade at a high of $1.1341, and the USDCAD dropped to a one-week low of 1.3196.


Major US indices finished sharply higher supported by the optimism circulating the trade talks between the world's two largest economies. Moreover, the news that the US lawmakers had secured a tentative deal on border security funding helped improving risk sentiment. The Dow Jones Industrial Average futures rose 1.5% to 25430, the S&P500 futures climbed 1.3% to 2744, and the Nasdaq futures jumped 1.6% to 7020.


The New Zealand dollar was among the top performers during the Asian session following the Reserve Bank of New Zealand interest rate decision. The bank left interest rates unchanged at 1.75% while being more hawkish than expected. The official cash rate is expected to remain unchanged till 2020, and rise afterward. Moreover, the bank said that employment is near max sustainable level, inflation will rise gradually towards 2%. The NZDUSD surged 1.4% to $0.6851, the GBPNZD fell 1.3% to 1.8834, and the EURNZD tumbled 1.5% to 1.6545.


Metals prices edged higher as the dollar plunged. The gold ounce rose to a high of $1314, the silver ounce held steady near $15.70, while palladium advanced to a four-week high of $1411.


Oil prices rallied higher following the news that Saudi Arabia cut its oil output in January by 800,000 barrels per day. Moreover, the supply issues from Venezuela due to the ongoing turmoil are providing support. On the other hand, the American Petroleum Institute reported that the weekly US crude oil stocks dropped 0.998 million barrels last week. The West Texas Intermediate crude futures gained 1.6% to $53.29, and Brent futures added 1.6% to $62.56. Market participants await the inventory data from the Energy Information Administration later today.

Major Economic Events

GMT Country Event Expectation Previous
9:30 UK CPI (YoY) (Jan) 1.9% 2.1%
9:30 UK Core CPI (YoY) (Jan) 1.9% 1.9%
10:00 US Industrial Production (MoM) (Dec) -0.4% -1.7%
13:30 US Core CPI (YoY) (Jan) 2.1% 2.2%
13:30 US CPI (YoY) (Jan) 1.5% 1.9%
15:30 US Crude Oil Inventories 2.668 1.263
19:00 US Federal Budget Balance (Dec) -11.0 -205.0
19:10 NZ RBNZ Gov Orr Speaks    


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