Lukman Otunuga
FXTM Research Analyst
The Dollar was thrown an unexpected
lifeline mid-week, as solid US data and a slightly more hawkish Federal Reserve
dampened expectations of a rate cut in the near-term. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Investors were forced to re-evaluate
the Federal Reserve’s monetary policy path for 2019 after Jerome Powell stated
that lower inflation was “transitory”. With the recent string of positive data
also easing concerns over the health of the US economy and boosting the
Dollar’s safe-haven status, bulls are likely to remain in the driver’s seat in
the near-term.
Today’s main risk event for the Dollar
will be the all-important jobs report which should offer fresh insight into the
health of the US labour force. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html Markets expect the US economy to have
added 180k jobs in April, with wage growth projected to rise 0.3%
month-on-month while the unemployment rate is anticipated to remain unchanged
at 3.8%. While every element of the jobs report is important, there will be a
special focus on wage growth which could shape interest rate expectations. Any
signs of wage growth cooling could rekindle speculation over the Fed cutting
interest rates – something that will punish the Dollar.
Looking at the technical picture, the
Dollar Index (DXY) is trading marginally below 98.00 as of writing. A weekly
close above this level may inject bulls with enough inspiration to attack
98.33.
Gold to continue testing $1,270 support line
Gold remains stuck in its bearish
channel after Fed Chair Jerome Powell pushed back against calls for a US
interest rate cut. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Such rhetoric has contributed to a
firmer Dollar, which in turn is making it tougher for Gold to climb. The
precious metal also remains suppressed by rising risk appetite, on news that a
US-China trade deal may be sealed by next week, even though similar headlines
have been oft-repeated in recent months. However, broader uncertainties over
the global growth outlook may cushion Gold’s decline in the near-term, even as
it continues to test the psychological $1,270 support level.
Commodity spotlight – WTI Oil
WTI Oil is on route to achieving two
consecutive weeks of losses for the first time in 2019. Despite US sanction
waivers on Iran’s Oil being lifted this week, Oil prices continued to fall as
US Crude inventories rose to their highest levels since 2017. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html This implies that OPEC+ producers have
their work cut out in trying to rebalance global Oil markets and may extend the
existing production cuts program past June, even as Russia failed to comply
with targets set for April. Hence, the $60/bbl psychological level will be an
important support in the immediate term, to see whether Oil bulls can regain control
of the narrative and reverse the slump.
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