The U.S. dollar strengthened towards one month high yesterday. The currency sparked against its major counterparts after Fed’s minutes indicated that two members favoured keeping rates unchanged and that members see inflation risks could require further tightening.
Bullions retreated from their day’s high following the strength in the dollar. Gold prices settled at 58681, down by 0.50%. Silver prices settled at 69722, down 0.23%.
Base metals plunged drastically as concerns over slowing economic growth in major importer China added to pressure on the red metal. Copper prices settled at 720.95, down 0.83%.
The economy in China continued to weaken last month, according to data released on Tuesday on industrial output and retail sales. This increased pressure on the country’s already sluggish growth and prompted officials to lower key policy rates to boost economic activity.
On Wednesday, oil prices continued to decline despite a significant reduction in U.S. crude stockpiles as investors weighed concerns over China’s fragile economy against anticipations of a tighter supply in the United States.
Despite increased crude output since the coronavirus epidemic destroyed gasoline demand, U.S. crude oil stockpiles dropped by over 6 million barrels last week due to robust exports and refinery run rates, according to Energy Information Administration statistics released on Wednesday.[EIA/S].
Crude oil prices plunged by 3.23% and settled at 6646. Natural gas plunged by 6.47% and settled at 216.80.
Economic data released yesterday
The latest Federal Reserve’s (Fed) meeting minutes showed board officials were split between raising rates or keeping them unchanged at the July meeting.
In the past month, seasonally adjusted annual homebuilding in the United States increased 6.7% to 983,000 units. They increased 9.5% from the prior year in July. Single-family starts in the West, where there was a surge in groundbreaking, increased by 28.5%.
U.S. Housing Starts rose 12.5% in the Midwest. However, they decreased by 1.3% in the heavily populated South and 3.4% in the Northeast.
The Office for National Statistics said that the annual consumer price inflation rate in the United Kingdom fell to 6.8% from June’s 7.9%, as the central bank and a Reuters poll of experts had forecast, and moved farther away from October’s top of 11.1%.
According to the EU statistics office, industrial production in the 20 countries that share the euro increased by 0.5% on the month, exceeding forecasts for a 0.2% increase, while gross domestic product increased by 0.3% in the second quarter, remaining unchanged from the first.
Economic data and events to watch today
Japan
At 10.00 am- Tertiary Industry Activity m/m. The forecast is -0.1% previous was at 1.2%.
All the above data could have a negative impact on the Yen.
Eurozone
At 2.30 pm- Trade Balance. The forecast is 3.8B previous was at -0.9B.
Above data could have a positive impact on the Euro.
Canada
At 6.00 pm – Foreign Securities Purchases. The previous was at 11.16B.
Above data could have a neutral impact on the dollar.
U.S
At 6.00 pm- Unemployment Claims. The forecast is 240k and the previous was at 248k.
At 6.00 pm – Philly Fed Manufacturing Index. The forecast is -9.8 previous was at -13.5.
At 7.30 pm – CB Leading Index m/m. The forecast is -0.40% previous was at -0.70%.
At 8.00 pm – Natural Gas Storage. Data is foreseen at 35B previous was at 29B.
Above data could have a volatile impact on the dollar.