Dollar under pressure as looming rate cuts and lower bond yields weigh
The Dollar has come under further pressure overnight as US Treasury yields fell further on the back of the growing conviction that the Fed will have to cut at least four times this year. Tomorrow’s FOMC minutes and Jerome Powell’s opening address at Jackson Hole will provide some clues to what the Fed will do.
Upcoming data on the state of the US economy and labour market will also provide cues as to whether the US is in for a hard landing or not. Polls are currently showing Democrat nominee Kamala Harris leading Donald Trump in the presidential race and this is further weighing on the Dollar.
The DXY index has fallen to 101.95 with the Euro nearly hitting 1.1100 and the Pound trading close to 1.3000, while the Yen is just above 147.00. The Rand’s strong run continued yesterday as it closed at the day’s best level of R17.6994 on the back of the weaker Dollar and positive risk sentiment. The local currency has given back some of the gains this morning in line with slightly softer EM currencies and is currently quoted at R17.75.
Gold holding steady above the $2,500 level, oil price slips
Gold is trading relatively unchanged this morning at $2,503 as traders await the Fed FOMC minutes and Jerome Powell on Friday. Platinum is trading slightly firmer at $957, but Palladium has lost just over 1.0% and is trading at $924.
The easing of geopolitical tensions in the Middle East, along with the ongoing demand concerns out of China, are weighing on the price of oil. Brent crude fell by 2.4% yesterday and is down a further 0.75% this morning to be trading at $77.00