The U.S. dollar strengthens against its major counterparts. Greenback gained against the euro and yen as investors focused on the likelihood that the Federal Reserve will continue hiking rates. Additionally, the Australian dollar increased after the Reserve Bank of Australia (RBA) unexpectedly raised interest rates.
The Reserve Bank of Australia increased interest rates by a quarter point to an 11-year high of 4.1% and warned that additional tightening may be necessary to ensure that inflation returns to target. As a result, the Australian dollar rose to its highest level since mid-May. The Australian currency was last up 0.60% at $0.6655.
The dollar index settled at 104.128, up by 0.13% on the day.
Bullion recovered from the day’s low following the jitters about the Fed rate. Gold prices settled at 59985 up by 0.23%, recovering from the low 59766. Silver prices recovered from the day’s lows of 71380 and settled at 71956 up 0.12%.
Base metals had a mixed trade ahead of China trade balance data. Copper prices were able to recover from the day’s low of 716.50 and settled at 722.45, up 0.18%. Zinc and Lead prices settled with a gain of 1.27%, and 0.14% respectively. However, Aluminum settled down by 1.02%.
The impact of Saudi Arabia’s unexpected announcement of extra production restrictions was overshadowed by worries about the state of the world economy, and crude oil lost its early gains.
Brent crude futures are down by 0.59% to $76.08. U.S. West Texas Intermediate crude was at $71.40 a barrel, down 0.67%. MCX crude oil was down 1.08% and settled at 5939.00
Both benchmarks increased by as much as 3% on Monday after Saudi Arabia, the leading exporter in the world, said over the weekend that it would reduce production by one million barrels per day in July in an effort to raise crude prices.
Economic data and events to watch
China
Tentative – China set to release Trade balance data with forecasts to have expanded by 676B compared to the previous 618B.
Tentative – USD-Denominated Trade Balance with forecast to have an expansion by 95.2B compared to 90.2.B prior.
Both numbers will have a positive impact on base metals prices.
Eurozone
At 11.30 am- German Industrial Production m/m is to be released. Data is foreseen at 0.7%, higher than a contraction of 3.4% previously.
At 12.15 pm – the French Trade Balance with forecast to have a contraction of 7.7B compared to a contraction of 8.0 B.
At 1.30 pm – Italian Retail Sales m/m is set to release with a forecast of 0.3%, higher than 0.0%.
Both the above data could have a positive impact on the Euro.
U.K.
At 11.30 pm – Halifax HPI m/m, data is foreseen at 0.2%, higher against contraction of 0.3%.
Above data could have a positive impact on the Pound.
Canada
At 6.00 pm – Labor Productivity q/q, data is foreseen at 0.1%, higher than the contraction of 0.5%.
At 6.00 pm – Trade Balance. Data is foreseen at 0.5B, lower than the previous reading of 1.0 B.
At 7.30 pm – BOC Rate Statement and Overnight Rate. Expect to hold the policy rate unchanged at 4.50%.
Both data could have a volatile impact on the dollar.
U.S.
At 6.00 pm – The trade Balance is to be released with a forecast to have a contraction of 75.8B against a contraction of 64.2 B.
At 8.00 pm- The crude Oil Inventories, forecast suggests a reduction to 1.4M compared to 4.5M of the previous week.
The dollar may suffer as a result of the statistics above.