The dollar index extended the recovery rally in start of the week, spark nearly 0.40% to 101.60. Â A stronger-than-expected US economic news was bullish for the dollar. China Trade Data, German CPI
The dollar also rose on reduced speculation that the Fed will cut interest rates aggressively as swap markets are discounting the chances for a 50 bp rate cut at next week’s FOMC meeting at 31%, down from 50% after the release of last Friday’s US payroll report. Strength in stocks Monday reduced liquidity demand for the doll.
Economic Data and Events Released Yesterday
- China on Monday reported its consumer price index rose by 0.6% year on year in August, missing expectations as costs of transportation and home goods, and rents declined. The consumer price index was forecast to have climbed 0.7% year on year in August.
- The producer price index fell by 1.8% year on year in August, more than the estimated 1.4% decline as per the Reuters poll.
- Japan gross domestic product expanded by an annualised 2.9% in the April-June quarter from the previous three months, the Cabinet Office’s revised data showed on Monday, versus economists’ median forecast for 3.2% growth and a 3.1% rise in the preliminary estimate.
Commodity Update
Gold: Gold gained ground as traders braced for the release of August’s inflation report in the United States (US) and looked for hints that the Federal Reserve (Fed) would cut rates by 50 or 25 basis points.
Crude Oil: Crude oil futures jumped by almost 1% on Monday as a potential hurricane approaching the U.S. Gulf Coast helped oil prices to recover some of the previous week heavy losses.
Copper: The grade rose in early signs of confirmation of the Chinese bid. Copper stocks in Shanghai futures have fallen, suggesting that physical demand has settled. Insurance premiums are paid by buyers to ensure that the shipping costs increase.
Yesterday’s price action
MCX gold futures settled +0.28 to 71628.Silver settled +1.07% to 83645. Copper settled+1.14% to 790.85. Crude oil +1.26% at 5776. Natural gas -4.50% to 182.40.
Major Economic Data and Event scheduled today (China Trade Data, German CPI)
Japan
At 5.20 – M2 Money Stock y/y. Data is foreseen at 1.5% from previous 1.4%.
Above data could have a positive impact on the Yen.
China
Tentative –
Trade Balance. Data is foreseen at 582B from the previous 602B.
USD-Denominated Trade Balance. Data is foreseen at 82.1B from the previous 84.7B.
Above data could have an negative impact on the Yuan.
Eurozone
At 11.30am– German Final CPI m/m. Data is foreseen at -0.1% from previous -0.1%.
At 1.30pm- Italian Industrial Production m/m. Data is foreseen at -0.2%from previous 0.5%.
Above data could have a volatile impact on the Euro.
UK
At 2.00pm-
Claimant Count Change. Data is foreseen at 95.5K from previous 135K
Average Earnings Index 3m/y. Data is foreseen at 4.1% from previous 4.5%.
Unemployment Rate. Data is foreseen at 4.1% from previous 4.2%
Above data could have a negative impact on the pound.
CANADA
At 5.40pm- BOC Gov Macklem Speaks.
Above data could have a mixed impact on the dollar.
US
At 3.30pm – NFIB Small Business Index. Data is foreseen at 93.6 from the previous 93.7.
At 7.30pm- FOMC Member Barr Speaks.
Above data could have a volatile impact on the dollar.
Happy trading!
Commodity Samachar Securities
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