News

Dollar Index Rebounds on Fed Comments

USD

The dollar index which measures the greenback against a basket of major currencies rebounded from a three-month low of 95.84 to trade higher at 96.32 following Fed's comment. The Federal Reserve Chairman was talking about the economic outlook and monetary policy in New York yesterday. He confirmed that the current solid fundamentals are supporting continued growth and job creation, despite inflation running somewhat below target. The Fed will monitor closely further information and economic data to ensure acting appropriately. Also, the St. Louis Fed President James Bullard, who is known for his dovish stance, said that a 50 basis-point rate cut "would be overdone.” The US 10-year yields recovered from 1.982% to 2.012%, the USDJPY edged higher to 107.50, and the EURUSD tumbled to $1.1340.

Equities

Major US stock-index futures tumbled on Fed officials’ comments and low chances of striking a trade deal between China and the United States. The Fed Chairman Powell stated that the Fed will monitor closely before acting, and Fed's dove Bullard disappointed investors by saying a 50 basis point interest rate cut would be overdone. On the other hand, despite the fact that the US and China are back at trade talks, the chances of reaching a deal at the G20 summit are minimal. The Dow Jones Industrial Average futures dropped to a low of 26509, and the S&P500 tumbled to 2918, and the Nasdaq futures plunged to 7616.

NZD

The Reserve Bank of New Zealand kept interest rates unchanged at 1.50% as widely expected. The bank confirmed that the global economic outlook has weakened as the downside risks to trade activity escalated, and the domestic growth has slowed last year. Therefore, a lower official cash rate could be needed for an extended period of time. Initially, the Kiwi dropped against the dollar to 0.6595, then recovered losses and edged higher to 0.6664.

Metals

Gold prices drifted lower as the greenback regained ground and US Treasury yields recovered. The price of a gold ounce faltered at a six-year high of $1439 and plunged to $1403 following Fed officials comments. The silver ounce fell to $15.16, and Palladium dipped to $1522.

Oil

Oil prices edged higher on a surprise drop in US crude oil stock. The American Petroleum Institute reported that the weekly crude oil stock fell 7.550 last week. The official numbers will be revealed today by the US Energy Information Administration. On the other hand, the escalating geopolitical tensions are backing oil prices along with the chances of an extension to the OPEC+ supply cut deal. The West Texas Intermediate crude futures rose to 59.11, and the Brent futures raced higher to $66.24.

Major Economic Events

GMT Country Event Expectation Previous

9:15

UK

Inflation Report Hearings 

 

 

12:30

US

Core Durable Goods Orders (MoM) (May)

0.1%

0.0%

14:30

US

Crude Oil Inventories

-2.540

-3.106


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