Dollar struggled for direction yesterday as the focus is likely to shift from the debt ceiling to the jobs report later this week. This might increase the likelihood of a subsequent Federal Reserve rate increase next month.
In order to suspend the $31.4 trillion debt ceiling until January 1, 2025, U.S. President Joe Biden and House Speaker Kevin McCarthy reached a budget agreement on Sunday. They said the deal was ready to move to Congress for a vote.
The dollar index settled almost flat at 104.057, retreating from the high of 104.5340.
Bullions remained under pressure. Gold prices settled at 59946 and settled up by 0.89%. Silver stayed in red and settled at 71043, with a minor loss of 0.12%.
Base Metals had a negative trade yesterday amid fear of a further deterioration in economic conditions this year.
Copper prices settled at 710.75, down by 0.50%, Zinc prices down by 1.81% and settled at 208.85. Aluminum and Lead prices settled with a loss of 0.72%, and 0.16% respectively.
Weaker-than-expected manufacturing activity readings from China may put pressure on the base metals prices.
Crude prices witnessed a speculative plunge yesterday. Prices dropped significantly amid jitters about Fed rate hikes and OPEC’s decision on output.
Brent crude futures were down by 4.24% to $73.59. U.S. West Texas Intermediate crude was at $69.49 a barrel, down 4.80%. MCX crude oil plunged by 4.64% and settled at 5756.
Economic data and events to watch
Japan
At 10.30 am- Consumer Confidence to be released. Data is foreseen at 36.10, higher than 35.4 previously.
Housing Starts y/y, data is foreseen at -0.9%, recovered from the previous contraction of 3.2%.
All the above data may have a positive effect on the Yen.
Eurozone
At 11.30 am- German Import Prices m/m are to be released. Data is foreseen at -0.6%, from 1.10% previously.
Tentative – German Prelim CPI m/m. Data was foreseen at 0.2%, lower than the previous 0.4%.
At 12.15 pm – French Consumer Spending m/m, data are foreseen at 0.3% against contraction of -1.3%.
At 12.15 pm – French Prelim CPI m/m, data is foreseen at 0.3% against 0.6%.
At 12.15 pm – French Prelim GDP q/q, data is foreseen at 0.2%, unchanged from the previous.
At 1.25 pm- German Unemployment Change, data is foreseen at 14k, lower than the previous 24K.
At 1.30- ECB Financial Stability Review.
At 2.30 pm – Italian Prelim CPI m/m, data is foreseen at -0.1% lower than 0.4%.
All the above data may have a volatile impact on the Euro.
Canada
At 6.00 pm- GDP m/m is set to release. Data is foreseen to have a contraction of 0.1% from the previous 0.1%.
Above data could have a negative impact on the Canadian dollar.
U.S.
At 6.20 pm- FOMC Member Bowman, at 10.00 pm – FOMC Member Harker and at 11.00 PM – FOMC Member Jefferson Speaks will bring clutter for the market.
At 7.15 pm- Chicago PMI. Data is foreseen at 47.10, lower than the previous reading of 48.6.
At 7.30 pm – JOLTS Job Openings. Data is foreseen at 9.41M, slightly lower from 9.59 M.
All the above data could have a negative impact on the dollar.
India
At 5.30 pm- India is set to release its quarterly, YoY GDP growth numbers. Data is foreseen at 4.6% slightly higher than the previous reading of 4.4%.
Above data could have a positive impact on the domestic currency.