News

Dollar, Yields Soar on Trump Comments

USD

The dollar index which measures the greenback against a basket of major currencies soared to a two-week high of 99.06 as US Treasury yields surged. US yields took a hit on Tuesday on Trump's impeachment inquiry which fueled political uncertainty concerns. However, yields recovered as Trump released a transcript of his conversation with the Ukrainian President. On the other hand, Trump revealed that a trade deal with China could be reached sooner-than-expected, adding momentum to the move in yields. A trade deal between the world's largest economies would boost the global economy, and ease Central Banks' and investors' woes over the global economic outlook. Also, the economic data continued to show that the US economy is solid, the New Home Sales rose to 713 thousand in August, supported by a drop in mortgage rates. Market participants are looking forward to the final reading of the second-quarter GDP figures later today for further insight on the performance of the US economy. The US 10-year yields surged to 1.74%, the USDJPY rose to 107.88, the EURUSD tumbled to $1.0937, and the GBPUSD plunged to $1.2343.

Metals

Gold prices dropped sharply as the US Treasury yields recovered from previous declines. Trump's comments on a trade deal with China, enhanced investors risk appetite, and they were seen fleeing safety assets. The price of a gold ounce declined to a low of $1500 after trading at a three-week high of $1535 in the previous session, the price of a silver ounce dived to $17.79, and palladium fell to $1630.

Oil

Oil prices bounced-off the lows as hopes of a trade deal succeeded in offsetting the buildup in US inventories. The US Energy Information Administration reported that the weekly US crude inventories rose by 2.412 million barrels last week. Oil benchmarks reacted negatively to the report. However, Trump's comments on a sooner-than-expected trade deal with China boosted prices. The West Texas Intermediate crude futures rose to $56.76, and Brent futures rallied to $62.60.

Major Economic Events

GMT Country Event Expectation Previous

12:30

US

GDP (QoQ) (Q2)

2.0%

2.0%

12:30

US

GDP Price Index (QoQ) (Q2)

2.4%

0.6%

12:30

US

Initial Jobless Claims

212

208

13:30

EU

ECB President Draghi Speaks  

 

 

13:45

UK

BoE Gov Carney Speaks 

 

 

14:00

US

Pending Home Sales (MoM) (Aug)

0.9%

-2.5%


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