Daily Update - 18th July 2018
On Tuesday, dollar is regaining some ground as markets before Fed chair Jerome Powell’s Congressional Testimony. But still, New Zealand Dollar is the strongest one as lifted by inflation data. Swiss Franc trades as the second strongest as European indices are trading broadly in red. There are also speculations that SNB could finally raise interest rate by the end of 2019. Meanwhile, Sterling is trading as the weakest one as markets didn’t take the job data positively. Yen follows as the second weakest. The dollar rose on Tuesday as Federal Reserve Chairman Jerome Powell provided an upbeat assessment on the U.S. economy while downplaying the impact of current global trade policy discussions on the outlook for further monetary tightening. Following Powell's remarks, the dollar rose to a six-month high against the yen. Investors were watching Powell's comments on global trade for any hint that it may slow the pace of interest rate increases. When Powell did not dwell on global trade, analysts said that was a green light to buy U.S. dollars. Looking ahead of the day, CPI Index from UK will be released that will give investor’s outlook of their current trend of Purchase & Supply Demand indicating Inflation of sterling. This is a strong indicator of Inflation which affects the purchase of GBP against the board. Followed by another relatively quiet day on the data front, with key stats limited to the Eurozone’s June inflation figures. Focus will be on the headline June figure that is forecasted to reflect softer inflationary pressures, with the finalized annual rate of inflation and annual rate of core inflation numbers unlikely to have a material impact barring deviation from prelim figures. Outside of the numbers, geo-political risk remains ever present, with the threat of fresh tariffs on the EU a continued possibility that could hit the EUR. Across the Pond, economic data out of the U.S is limited to June housing data numbers, with building permits and housing starts scheduled for release. While upbeat numbers tend to be Dollar positive, the housing sector reflective of economic conditions, FED Chair Powell and President Trump will likely remain the main areas of focus. Following Trump’s backtrack and FED Chair Powell’s upbeat views on the U.S economy and policy, tonight’s testimony could provide further support, though the ongoing trade war remains the curve ball for the FED, the U.S economy and ultimately the Greenback.Yesterday’s Focus
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