iFOREX | Jul 20, 2016 06:52AM ET
The dollar rose to a four-month high against a basket of major currencies on Tuesday, after the release of data showing U.S. housing starts rose more than expected in June, surging 4.8% to a seasonally adjusted annual pace of 1.19 million units, underpinning a theme of strength in the U.S. economy. Furthermore, after June's jobs report showed U.S. employers added 287,000 jobs, beating expectations by more than 100,000, continued positive data have convinced some investors pricing back in the chances the Federal Reserve will raise U.S. overnight interest rates before the end of the year, at his last meeting in December.
The rise in the dollar index was backed by a sizeable fall in the euro, which dipped to an 11-day low against the dollar of $1.1011, the euro was last down 0.5% for the day.
The dollar also gained ground against the yen, touching its highest level since June 24, the day after Britain's surprise vote to leave the European Union.
The greenback was also boosted by expectations of upcoming central bank easing from the Reserve Bank of Australia and Reserve Bank of New Zealand.
Now investors’ focus will be on Thursday ECB monetary policy decision, followed by a post-policy meeting press conference with President Mario Draghi, and on U.S. data on jobless claims, existing home sales and manufacturing activity in the Philadelphia region.
GBP/USD
The pound continued to show weakness on Tuesday, despite official data showing a larger than expected increase in inflation and while markets waited for the International Monetary Fund to slash economic forecasts in the wake of the U.K.’s decision to leave the European Union.
In a report, the U.K. Office for National Statistics said the rate of consumer price inflation rose by a seasonally adjusted 0.5% last month, above forecasts for a gain of 0.4%. Though sterling initially pared losses on the news, managing to break through $1.32, the strength was shown to be temporary.
Meanwhile, credit rating agency Moody’s warned in a report that the U.K.’s credit worthiness was under downward pressure following its decision to exit the EU, and that medium-term growth prospects for the British economy could be weaker, if it fails to reach a new trade agreement with Europe. Today the U.K. is to publish the monthly employment report.
Gold
Gold ticked up on Tuesday, in spite of a firmly stronger dollar, as investors awaited two critical central bank meetings later this month, for further indications on the strength of the yellow metal as a hedge against inflation.
The precious metal has rebounded somewhat over the last two sessions, after retreating from 28-month highs earlier this month, in a Brexit-inspired rally. Last week, gold slid by more than 2.2%, suffering its first negative week since early-June. Nevertheless, the yellow metaL is on track for one of its strongest years on record after soaring roughly 25% year to date.
WTI Oil
Crude futures wavered in choppy, volatile trade on Tuesday, ahead of the release of the American Petroleum Institute's weekly inventory report, as investors await for further signals on the glut of crude and refined product on the domestic market.
But oil prices were slightly higher in early Asia on Wednesday, after industry data on U.S. crude stocks showed a solid fall at the end of last week. Figures from the American Petroleum Institute showed that U.S. crude supplies fell by 2.3 million barrels for the week ended July 15.
Today the U.S. Energy Information Administration is to release its weekly report on oil and gasoline stockpiles, which could show a draw of 2.2 million barrels.
US 500
Wall Street traded mixed on Tuesday as investors took a breather, pocketing some profits after the record closing highs reached in the prior session, while markets digested a slew of second quarter earnings and the U.S. watched from the sidelines, as the U.K.’s decision to leave the EU took its toll on economic forecasts.
The S&P 500 and the Nasdaq were lower, weighed down by Netflix (NASDAQ:NFLX) and health insurers, but the losses were offset on the Dow by Johnson & Johnson (NYSE:JNJ)'s strong results. Also weighing on sentiment was the International Monetary Fund's move to cut its global growth forecasts for the next two years, due to uncertainty over Britain's looming exit from the European Union.
Now investors’ focus will be on Thursday U.S. data on jobless claims, existing home sales and manufacturing activity in the Philadelphia region.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.