The dollar index Wednesday recovered nearly 0.40%, to 100.90 following the release of the stronger-than-expected US Aug new home sales report. Higher bond yields also strengthened the dollar’s interest rate differentials. The currency initially moved lower due to the strength in the Chinese yuan, which rallied to a 16-month high on the heels of Chinese government actions this week to boost stimulus measures.
Economic Data and Events Released Yesterday
- U.S. Aug new home sales fell -4.7% m/m to 716,000, a smaller decline than expectations of a decline to 700,000.
- The Bank of Japan (BoJ) board members shared their views on the monetary policy outlook on Thursday, per the BoJ Minutes of the July meeting.
- People’s Bank of China lowered its one-year medium-term lending facility rate by 30 basis points to 2%. That came a day after PBOC Governor Pan Gongsheng laid out plans to cut the reserve requirement ratio by 50 basis points before the year ends and reduce key lending rates such as the seven-day repo rate, medium-term lending facility and loan prime rates.
Commodity Update
Gold: Gold hit a record high, rising for a fifth day following last week’s cut to U.S. interest rates and increasing violence in the Middle East. The metal has risen steadily since last Wednesday’s 50 basis point cut to U.S. interest rates by the Federal Reserve’s policy committee, which also indicated it is likely to cut rates by a further 50 points by year-end. Lower interest rates cut the carrying cost of owning gold, which pays no interest.
Crude Oil: Crude oil retreated nearly 2% yesterday. A stronger dollar Wednesday weighed on energy prices. Oil prices were also weighed down by concern that Chinese fuel demand will remain stagnant despite government actions to boost stimulus measures.
Copper : Copper futures held slightly jump after gaining over 3% in the previous session, hovering at an over two-month high as top consumer China unveiled a slate of economic support measures. On Wednesday, the People’s Bank of China lowered its one-year medium-term lending facility rate by 30 basis points to 2%.
Yesterday’s price action
MCX gold futures settled +0.41 to 75313. Silver settled -0.38% to 92045. Copper settled +0.50% to 840.65. Crude oil -2.37% at 5841. Natural gas -1.36% to 216.80.
Major Economic Data and Event scheduled today – US Fed Chair
SWISS BANK
At 1.00pm – SNB Monetary Policy Assessment.
SNB Policy Rate (Expect 1.0% from previous 1.25%)
At 1.30pm- SNB Press Conference
Above data could have a positive impact on the Dollar.
Eurozone
At 1.30pm-
ECB Economic Bulletin
M3 Money Supply y/y. Data is foreseen at 2.5% from previous2.3%.
Private Loans y/y. Data is foreseen at 0.6% from previous 0.5%.
At 7.00am- ECB President Lagarde Speaks
Above data could have a volatile impact on the Euro.
US
At 6.00pm –
Final GDP q/q. Data is foreseen at 3% from previous 3%
Unemployment Claims. Data is foreseen at 224k from previous 219k.
Core Durable Goods Orders m/m. Data is foreseen at 0.1% from previous -0.2%.
Durable Goods Orders m/m. Data is foreseen at -2.8% from previous 9.8%.
Final GDP Price Index q/q. Data is foreseen at 2.5% from previous 2.5%.
At 6.40pm-
FOMC Member Collins Speaks
FOMC Member Kugler Speaks
At 6.45pm-
FOMC Member Bowman Speaks
Fed Chair Powell Speaks
At 6.55pm- FOMC Member Williams Speaks
At 7.30pm- Pending Home Sales m/m. Data is foreseen at 0.9% from -5.5%.
At 8.00pm-
Natural Gas Storage
FOMC Member Barr Speaks
FOMC Member Cook Speaks
At 8.45pm-
Treasury Sec Yellen Speaks
At 10.30pm- FOMC Member Barr Speaks.
FOMC Member Kashkari Speaks
FOMC Member Cook Speaks
Above data could have a volatile impact on the dollar.
Happy Trading!
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