News

Dollar Slammed by Dovish Fed, Gold Soars

USD

The dollar index, which measures the greenback against a basket of major currencies, fell sharply following the monetary policy meeting of the Federal Reserve. The Fed left interest rates unchanged at 2.25-2.50%. However, most of the committee members see lower interest rates in the future. The median dot plot moved to 2.1% versus 2.6% previously. The Federal Reserve Chairman Jerome Powell said in his press conference that they prefer seeing a further drop in the economic activity before acting. The CME Fed Watch tool is now assuring an interest rate cut in July. The US 10-year yields dropped to 1.976%, the lowest since November 2016, the USDJPY tumbled to 107.46, the lowest since early January, and the EURUSD climbed to $1.1284.

Metals

Precious metals prices soared as the dollar dropped along with US Treasury yields following the FOMC meeting.  The gold ounce breached the multi-year resistance level and traded at $1393 during the Asian session, the highest since September 2013. The silver ounce climbed to a three-month high of $15.40, and palladium raced higher to $1527.

Oil

Oil prices extended gains supported by the Fed's dovish tone and the latest development in the Persian Gulf. It was clear that the Federal Reserve will take the needed measures to protect economic expansion, which eased investors' concerns over a global economic slowdown. On the other hand, oil prices got a boost from the news that a US Drone was downed in international airspace over the Strait of Hormuz. The West Texas Intermediate crude oil futures rose to a high of $55.83, and Brent futures climbed to a ten-day high of $63.86.

Major Economic Events

GMT Country Event Expectation Previous

8:30

UK

Retail Sales (MoM) (May)

-0.5%

0.0%

11:00

UK

BoE Interest Rate Decision (Jun)

0.75%

0.75%

12:30

US

Philadelphia Fed Manufacturing Index (Jun)

10.6

16.6

12:30

US

Initial Jobless Claims

220

222

20:00

UK

BoE Gov Carney Speaks 

 

 


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