News

Dollar Holds Steady Ahead of Anticipated Rate Cut

USD

The dollar index which measures the greenback against a basket of major currencies held steady near a two-month high at 98.07 ahead of a key FOMC meeting. The Federal Reserve will conclude its two-day monetary policy meeting later today where the Fed is widely expected to cut interest rates by 25 basis points to curb the expected economic slowdown. Despite the high probability of a rate cut today, market participants will be looking for hints on the next step. The former NY Fed president stated earlier that the Fed could cut for one time and then hold for the rest of the year, as the economic data continued to suggest that the US economy is resilient. The US 10-year yields fell for the fourth consecutive day to reach a low of 2.043%, the USDJPY is trading near 108.50 level, and the EURUSD edged slightly higher to $1.1160.

AUD

The Australian dollar inched higher against rivals during the Asian session supported by strong economic data. The Consumer Price Index rose 1.6% during the second quarter of 2019, signaling that the two consecutive rates cuts applied by the Reserve Bank of Australia were beneficiary. Moreover, the Chinese Manufacturing PMI rose to 49.7 in July from 49.4 previously to suggest a rebound in the manufacturing sector. The AUDUSD surged to $0.6899 after falling for eight consecutive days, and the EURAUD dropped from a one-month high of 1.6247 to trade lower at 1.6169 raising the chance to stop the five-day winning streak.

Metals

Gold prices edged higher as the dollar was slightly soft ahead of an anticipated interest rate cut. The price of a gold ounce traded at a high of $1433 for the first time this week, the silver ounce climbed to $16.58, and palladium erased partial losses and rallied to $1533.

Oil

Oil prices extended gains amid a drop in US oil stock and expectations of an interest rate cut. The American Petroleum Institute reported that the US weekly crude oil stock dropped by 6.024 million last week. Moreover, investors are optimistic about the Fed's intentions to cut interest rates today for the first time since the financial crises which could spur the economic growth. The West Texas Intermediate crude futures climbed to a two-week high of $58.55, and Brent futures rallied to $65.26.

Major Economic Events

GMT Country Event Expectation Previous

9:00

EU

CPI (YoY) (Jul) 

1.1%

1.3%

9:00

EU

GDP (YoY) 

1.0%

1.2%

12:15

US

ADP Nonfarm Employment Change (Jul)

150

102

12:30

CA

GDP (MoM) (May)

0.1%

0.3%

14:30

US

Crude Oil Inventories

-2.588

-10.835

18:00

US

Fed Interest Rate Decision

2.25%

2.50%

18:30

US

FOMC Press Conference 

 

 


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