The U.S. dollar extended its for on Tuesday also. The currency dropped to a two-month low against a major currency index, after Federal Reserve officials signaled that the central bank is near the end of its tightening cycle.
After British wage growth reached a joint record high, the pound rose to a nearly 15-month high of $1.2934, putting pressure on the Bank of England to tighten policy even more in order to manage inflation. At $1.2920, it was last up 0.5%.
The dollar index, which measures the U.S. currency against a basket of six others and settled at 101.7110 compared to the previous day’s close of 101.9520 down by 0.23%
Bullions remained directionless for a second day as the market awaited for the US CPI numbers which should provide more clarity on the Fed’s progress in its fight against stubbornly high inflation.
Gold Prices settled at 58773, up 0.14%. Silver prices settled at 71117, and retreated from the day’s high of 71872 down by 0.35%.
Copper prices retreated from the day’s high of 726.25 and settled at 718.50, down by 0.54%.
The world’s largest oil exporters reduced their supply, the U.S. currency was weakening, there was optimism for increased demand in developing nations, and crude oil spiked above 2% and reached a 10-week high.
With the advances, Brent entered technically overbought territory for the second time in three days, and WTI is on course to close at its highest level since April 28.
According to the International Energy Agency (IEA), the second half of 2023 should see further tightness on the oil market due to high demand from China and other developing nations as well as recently announced production curbs, particularly those by major exporters Saudi Arabia and Russia.
Economic data and events to watch
U.K.
At 11.30 am – BOE Financial Stability Report, Bank Stress Test Results, FPC Meeting Minutes and FPC Statement.
At 1.30 pm – BOE Gov Bailey Speaks.
All the above headlines will bring clutter for the pound.
U.S.
At 6.00 pm – CPI m/m is set to release. Data is forecast to expand by 0.3% from the previous 0.1%.
CPI y/y. Data is forecast to have reduced by 3.1% from the previous 4.0%.
Core CPI m/m. Data is forecast to reduce by 0.3% from the previous 0.4%.
At 7.15 pm – FOMC Member Kashkari Speaks.
At 8.00 pm – Crude Oil Inventories. Forecast to have a contraction of 1.1M from the previous contraction of 1.5M.
All the above data is expected to have a negative impact on the dollar.
Canada
At 7.30 pm – BOC Monetary Policy Report. BOC Rate Statement.
Key interest rate decision by the Bank of Canada. The market is forecast to hike by 5.00% from 4.75%.
At 8.30 pm – BOC Press Conference.
All the above data could have a positive impact on the Canadian dollar.
India
At 5.30 pm – CPI YoY (June) to release. Data is forecast to have expanded by 4.59% from 4.25%.
At the same time, Industrial production will be released. Data is foreseen at 1.2% from the previous 4.2%.
All the above data could have a negative impact on Rupee.