Dollar Edges Higher on Strong Data


The dollar index which measures the greenback against a basket of major currencies hovered near a two-month high of 98.08 supported by strong US economic data. The recent data showed that the US economy grew by 2.1% during the second quarter of 2019, and the GDP Price Index rose by 2.5%, lowering the chances of aggressive easing by the Federal Reserve. Market participants are looking forward to the PCE figures tomorrow ahead of the awaited interest rate decision on Wednesday, where the Fed is widely expected to cut rates by 25 basis points. On the other hand, the dollar is finding support from the falling European currencies. The rising chances of a hard Brexit are weighing on the pound, and the weakening economic data from the Eurozone while the ECB preferred to wait-and-see suggested further drop in the economic activity of the region. The euro and pound account for almost 70% of the Dollar index basket, where a significant drop in the mentioned currencies would benefit the buck. The USDJPY rose to a high of 108.70, the EURUSD dipped to $1.1118, and the GBPUSD tumbled to $1.2335.


Gold prices continued to hold the tight trading range finding support near a low of $1410, and resistance near $1424. Market participants are looking forward to the FOMC meeting outcome, where a dovish stance could restart a fresh round of buying and vice-versa. The price of a silver ounce is still holding above support of $16.30, while palladium edged higher to $1534.


Oil prices remain caught in a tight trading range as investors await fresh fundamental drivers. The recent geopolitical tensions receded, while the focus now goes to the Fed's meeting, and the resumed trade talks between China and the United States, where easing measures by the Fed and positive talks could enhance investors’ optimism over the economic outlook and intensify their risk appetite. The West Texas Intermediate crude futures traded at a low of $55.90, and Brent futures dipped to $62.90.

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