Dollar Index Inches Up as European Currencies Falter

Dollar Index Inches Up as European Currencies Falter


The dollar index which measures the greenback against a basket of major currencies is on a strong note for the third consecutive day, supported by the rising uncertainties from Europe and fresh trade tensions. DXY was down 0.2% in early trading yesterday but reversed the losses and closed 0.1% up at 97.06. The greenback advanced on Trump's latest comments concerning the trade talks with China. Trump said that he expects to raise tariffs on $200 billion in Chinese imports to 25 percent from the current 10 percent. The safe-haven status continues to boost the demand for the dollar amid the growing market uncertainties and risks. The USDJPY rose 0.6% to 113.56, and the USDCAD added 0.2% to 1.3250. Market participants are waiting for Jerome Powell speech tomorrow and the FOMC meeting minutes on Thursday to grasp clues about the interest rate path.


The Euro dropped against the United States dollar to trade near the $1.13 level. The common currency tumbled after the European Central Bank president Mario Draghi highlighted the slowdown on the economic activity and that the prevailing uncertainties call for patience. However, Draghi expected the asset purchases program to end in December. A further weakness in the economic activity will force the ECB to adopt the current low-interest rate levels for a longer period.


The British pound faltered against other currencies as Trump's comments concerning that Brexit deal could intensify the opposition to Theresa May's proposal. Trump said that the current deal is great for the European Union, and could lead to trade disputes between the United Kingdom and the United States. With those comments, it will be tougher for Theresa May to earn the approval of the UK House of Commons on the Brexit deal. The GBPUSD lost 0.4% to $1.2747, and the GBPJPY fell 0.4% to 144.80.


Gold prices drifted lower as the dollar strengthened amid fears of a global economic slowdown and worsening trade spats between China and the United States. The gold ounce lost 0.2% during the Asian session to $1219. Meanwhile, the silver ounce plunged 0.2% to trade at a two-week low of $14.16.


Oil prices bounced on Monday as the thirteen-month lows attracted traders. The West Texas Intermediate crude futures jumped 2.4% to $51.58, and the Brent futures added 2.3% to $60.53. However, oil prices gave up partial gains following the news that Saudi Arabia oil production climbed to an all-time high of 11.3million barrels per day in November. The American Petroleum Institute will report the US weekly crude oil stock later today.

Major Economic Events

GMT Country Event Expectation Previous
15:00 US CB Consumer Confidence (Nov) 135.9 137.9
21:30 US API Weekly Crude Oil Stock    


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