News

Dollar Races Higher Bolstered by Yields, Precious Metals Recover

Dollar

The dollar index which measures the greenback against a basket of major currencies extended upside rally trading at 93.91 buoyed by the rise in US treasury yields. Following the solid jobs report on Friday, the US PPI for July surprised to the upside signaling an improvement in demand, raising the hopes of healthy and rapid recovery. The US Treasury yields cheered the upbeat data, where the US 10-year yields rose to a five-week high of 0.675%. Market participants are looking forward to the Consumer Price Index later today, and the US 10-year auction.

Equities

Major US stock index futures recovered during the Asian session. After the market closed on Tuesday, President Donald Trump announced that the government is going to buy 100 million doses of Moderna's COVID19 vaccine, which is in the final trial stages. On the other hand, market participants are awaiting the resumption of negotiations over the next relief bill. The Dow Jones Industrial Average futures rose to 27896, the S&P500 futures rallied to 3355, and Nasdaq futures advanced to 10979.

NZD

The New Zealand dollar fell sharply against rivals following the Reserve Bank of New Zealand Monetary policy meeting. The bank left the official cash rate unchanged at 0.25%, but boosted the Large Scale Asset Purchase (LSAP) program to 100 billion NZD. Also, the board agreed that a package of additional monetary instruments must remain in active preparation, including negative interest rates. The NZDUSD declined to a four-week low of $0.6524, and the EURNZD rallied to 1.7969, the highest since late May.

Metals

Precious metals recovered after dropping sharply yesterday. The growing hopes over the economic recovery drove the dollar and US treasury yields higher and weighed on investors' appetite towards precious metals. The price of a gold ounce tumbled to $1860 during the Asian session, but managed to recover to $1949 during the European session. Silver had the same scenario dropping to $23.44, and recovering to $26.30. Meanwhile, palladium futures hovered near $2200.

Oil

Oil prices traded in a tight range awaiting fresh fundamental drivers. The American Petroleum Institute reported a decline of 4.4 million barrels in US crude oil stock. Market participants are looking forward to the official figures by the US Energy Information Administration. The West Texas Intermediate September delivery hovered near $42, and Brent blend October delivery held steady near $45.

Major Economic Events

GMT Country Event Expectation Previous

9:00

EZ

 Industrial Production (MoM) (Jun)

10.0%

12.4%

12:30

US

 CPI (MoM) (Jul)

0.3%

0.6%

14:30

US

Crude Oil Inventories

-2.875

-7.373

 Disclaimer

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