After Federal Reserve officials’ remarks confirmed market expectations that the US central bank is nearing the conclusion of its tightening cycle, the US dollar went negative and fell to a three-week low.
Despite the fact that Friday’s report showed that employment growth in the United States was the weakest in 2-1/2 years, it is largely predicted that the Fed will increase interest rates by another 25 basis points this month. Following a Fed pause in June, a rate increase is anticipated for July.
On Monday, a number of Fed officials, including San Francisco Fed President Mary Daly, warned that while the current cycle of tightening monetary policy is almost complete, the Fed would likely need to raise interest rates one more time to reduce the persistently high inflation.
The dollar index, which compares the value of the dollar to a basket of six other currencies, closed at 103.110, down 0.23 per cent from the previous day’s closing of 103.348.
Bullions struggled for direction yesterday as a substantially weaker-than-expected nonfarm payrolls report dented the dollar and spurred hopes that the Federal Reserve was close to ending its rate hike cycle.
Gold Prices settled at 58689 recovering from the day’s low of 58403. Silver prices settled at 71365 compared to the previous day’s close of 71310. Recovered from the day’s low 70410.
Copper was able to recover from the day’s low as a series of weak economic indicators from China spurred bets on more government stimulus measures in the world’s largest copper importer. MCX copper futures settled at 722.40, up 0.6%.
On Monday, the price of crude oil decreased by more than 5% as a result of increased expectations for further U.S. interest rate increases and profit-taking by investors following last week’s 4.5% increase. MCX Crude oil settled at 6024, down 0.64%.
According to data released on Thursday, U.S. stockpiles decreased more than anticipated in the week leading up to June 30. An especially large decline in petrol inventories pointed to increased fuel demand during the summer travel season.
Economic data and events to watch
Eurozone
At 11.30 am – German Final CPI m/m. Data is forecast to come at 0.3%, unchanged from the previous 0.3%.
At 1.30 pm – Italian Industrial Production m/m. Data is forecast to have expanded by 0.6% against a contraction of 1.9%.
At 2.30 pm – German ZEW Economic Sentiment. Data is foreseen by a contraction of 10.7 from the previous contraction of 8.5.
At the same time, the ZEW Economic Sentiment. Data is foreseen by a contraction of 10.2 from the previous contraction of 10.00.
Above data could have a negative to volatile impact on the Euro.
U.K.
At 11.30 am – Claimant Count changed. Data is foreseen at 20.5 higher from a contraction of 13.6K.
Average Earnings Index 3m/y at the same time to release. Data is foreseen at 6.8% higher than the previous 6.5%.
The unemployment rate expects to come at 3.8%, unchanged from the previous.
Above data could have a negative impact on the pound.
U.S.
At 3.30 pm- NFIB Small Business Index. Data is foreseen at 89.9 higher than the previous 89.00.
Above data and events will have a neutral impact on the dollar.