News

Greenback Drifts Lower on Softer Data, PCE Eyed

USD

The dollar index which measures the greenback against a basket of major currencies retreated from a one-week high of 96.39 on disappointing data. The final figures showed that the US economy grew by 3.1% during the first quarter of 2019, and the GDP Price Index came in at 0.6% missing estimates. The soft GDP price index reading back in late May triggered a sell-off on the dollar as it signaled for lower inflation. Market participants will focus today on the Fed's favorite inflation gauge, the PCE index, to grasp hints on inflation. A weaker-than-expected reading could raise the chances of aggressive easing by the Federal Reserve. The US 10-year yields fell hovered above the 2% level, while the USDJPY faltered at a high of 108.15 and tumbled to 107.55, and the EURUSD edged higher to $1.1390 ahead of the Eurozone June preliminary CPI figures.

Metals

The price of a gold ounce spiked to a high of $1424 during the Asian session but ran into sellers, losing partial gains. There are several factors supporting the demand for gold prices, among them a weaker dollar and Treasury yields amid growing speculation that the Federal Reserve will shift policy, trade uncertainty between China and the United States, and the escalating geopolitical tensions. Meanwhile, the price of a silver ounce held steady above $15.20, and Palladium rallied to a three-month high of $1567.

Oil

Oil prices continued to trade in a tight range near a three-week high ahead of an awaited OPEC+ meeting. Market participants are expecting an extension to the OPEC+ supply-cut deal that was reached back in December 2018. On the other hand, the sharp drop in US crude oil inventories provided partial support to the prices. The West Texas Intermediate crude oil futures settled at $59.27, and Brent futures finished at $66.35.

Major Economic Events

GMT Country Event Expectation Previous

8:30

UK

GDP (QoQ) (Q1)

0.5%

0.5%

9:00

EU

CPI (YoY) (Jun) 

1.2%

1.2%

12:30

US

Core PCE Price Index (MoM) (May)

0.2%

0.2%

12:30

CA

GDP (MoM) (Apr)

0.1%

0.5%

14:00

US

Michigan Consumer Expectations (Jun)

89.4

88.6

17:00

US

U.S. Baker Hughes Oil Rig Count

 

789


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