Dovish FOMC minutes, Dollar recovers slightly
The Dollar weakened quite sharply against the major currencies yesterday ahead of the FOMC minutes, falling to 1.1173 against the Euro and to 1.3119 against the Pound at one point. We did see some recovery after the Fed FOMC minutes basically confirmed that the Fed would start cutting rates in September.
The DXY index fell to 101.00 yesterday but is up at 101.20 this morning, with the Euro, Pound, and Yen currently sitting at 1.1143, 1.3088, and 145.19, respectively.
Fears of a recession in the US are starting to surface again and risk sentiment has slipped somewhat in the last two trading sessions. Today, we have a range of US data indicators that could provide some insight into the US economy and labour market, including both manufacturing and services PMIs, existing home sales, and the weekly jobless claims data, while tomorrow, we have Powell’s opening address at Jackson Hole.
EM currencies are trading off their recent stronger levels with the Rand softening to R17.90 against the Dollar, R19.94 against the Euro, and R23.42 against the Pound this morning.
Metal prices fairly flat but Oil slips further
Gold is a touch weaker this morning but still holding above the $2,500 level as traders eye Powell’s speech tomorrow. Platinum and Palladium are both up around 0.25% at $965 and $954, respectively, while Brent crude has slipped to $76.03. Talk of a possible US recession and the ongoing struggles in the Chinese economy are weighing on the demand outlook and keeping Brent on the back foot.