Dollar Index Holds Steady Ahead of a Busy Day


The dollar index which measures the greenback against a basket of major currencies was almost flat, trading in a tight range between 95.60 and 95.90 ahead of a busy day. Market participants await the release of the January ADP Nonfarm Employment Change and the first reading of the fourth quarter GDP. Moreover, the two-day Federal Open Market Committee meeting will end today and investors widely expect the Fed to keep interest rates unchanged and adopt a cautious tone. The FOMC statement and rate decision will be followed by a press conference by Chairman Powell to communicate the decision to the public.


The British pound ended lower for the second consecutive day following crucial parliamentary votes on Brexit. The Brady amendment which called for finding an alternative arrangement for the Irish backstop passed in the UK parliament and granted Prime Minister May the chances to renegotiate the deal with Brussels. However, there were reports from the EU saying that nothing will be renegotiated. The parliament also passed the Spelman amendment which is a non-binding resolution saying the U.K. will not leave the EU without a deal. The GBPUSD tumbled to a low of 1.3056 which is also the 200-day simple moving average.


The Australian dollar gained against peers on strong inflation data. The fourth quarter Consumer Price Index YoY rose 1.8% versus an expectation of 1.7%. The inflation data could raise that chances that the next interest rate move by the Reserve Bank of Australia will be up. The AUDUSD rose to a high of 0.7201, and the EURAUD dropped to 1.5878.


Gold prices continued higher as market participants expect the Fed to adopt a dovish tone in its meeting. The gold ounce climbed to an eight-month high of $1315, and the silver ounce jumped to a six-month high of $15.95.


Oil prices surged after the United States imposed large scale sanctions on Venezuela's oil company PDVSA. The sanctions aimed to weaken the current president Nicolas Maduro. On the other hand, the American Petroleum Institute reported that the US weekly crude oil stock rose by 2.098 million barrels last week. The official numbers from the Energy Information Administration will be released today. The West Texas Intermediate crude futures traded at a high of $53.89, and the Brent futures rose to a high of $61.76.

Major Economic Events

GMT Country Event Expectation Previous
13:00 EU German CPI (MoM) (Jan) -0.9% 0.1%
13:15 US ADP Nonfarm Employment Change (Jan) 180 271
13:30 US GDP (QoQ) (Q4) 2.6% 3.4%
15:00 US Pending Home Sales (MoM) 0.8% -0.7%
15:30 US Crude Oil Inventories 3.000 7.970
19:00 US Fed Interest Rate Decision 2.50% 2.50%
19:00 US FOMC Press Conference    


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