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Daily market commentary: The US dollar pulled back from yesterday’s lows



FOREX

The US dollar pulled back from yesterday’s lows, continuing to edge higher in relation to other major currencies during early Thursday trading. The greenback found support after a Fed official, Richard Clarida, someone with a dovish reputation, spoke publicly about initiating the tapering of asset purchases later this year or early in 2022 and also hinting at the possibility of conditions being conducive to a rate hike in late 2022. Such comments came at a time when the state of the labour market remains central to the Fed’s decision making, with Friday’s non-farm payrolls likely to provide more direction after the ups-and-downs experienced by the dollar since mid-June.

Ricardo Evangelista – Senior analyst, ActivTrades

daily market analysis

OIL

WTI reversed earlier gains and is flat so far during early Thursday trading. A surge in coronavirus cases caused by the Delta variant is forcing several countries around the world to impose new lockdowns, a scenario that is likely to negatively impact fuel demand. Also weighing on the price of oil is a surprise uptick in US crude stockpiles, coupled with US dollar gains as the Federal Reserve appears ready to start tapering. Amidst such a scenario we could perhaps expect the price of the barrel to have declined more significantly, however a build-up of tensions in the Middle East, with Iran accused of masterminding a number of attacks on tanker ships, is generating some uncertainty and preventing, at least for now, further lowering of oil prices.

Ricardo Evangelista – Senior analyst, ActivTrades

 GOLD

Gold’s inverted correlation with the US dollar continues to condition the performance of the precious metal, which is slightly down during early Thursday trading in an almost exact mirror image of what is happening to the greenback. The dollar rebounded yesterday from levels close to multi-week lows, after a Federal Reserve official, known for a usually dovish stance, publicly admitted that the tapering of asset purchases may come as early as at the end of this year and conditions may even allow a rate hike in late 2022 or early 2023. Should Friday’s non-farm payrolls meet or exceed the consensus number of 900,000, fears over the state of the US labour market, which has been at the centre of the Fed’s attention, may start to dissipate, with the dollar likely to find more support and send gold in the opposite direction.

Ricardo Evangelista – Senior analyst, ActivTrades


Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.

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Daily market commentary: The US dollar pulled back from yesterday’s lows

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