Thursday's iFOREX Analysis: July 20 ,2017
iFOREX | Jul 20, 2017 05:35AM ET
The dollar traded slightly higher against most major currencies on Wednesday, supported by solid housing data indicating a turnaround in the sluggish pace of U.S. home building.
U.S. homebuilding in June exceeded analysts’ expectations, after declining for three straight months, offsetting the recent raft of economic reports pointing to possible weakness in the economy.
Meanwhile, sterling remained range bound against the dollar, falling by 0.06%, ahead of an update due Thursday on the progress of Brexit negotiations to determine terms of the UK’s exit from the European Union.
In Japan, the central bank kept monetary policy steady on Thursday, but did offer language to suggest a near-term change in the stance was not on the cards.
Today, the UK is to report on retail sales the ECB is to announce its latest monetary policy decision and President Mario Drahi is to hold a press conference.
The U.S. is to publish data on initial jobless claims and manufacturing activity in the Philadelphia region.
EUR/USD
The euro fell slightly against the dollar on Wednesday, pressured by a solid report on U.S. housing, where housing starts jumped 8.3 percent to a seasonally adjusted annual rate of 1.22 million units, the highest level since February, according to the Commerce Department.
Economists had forecast activity rising to a rate of 5.8%.
Traders are now looking ahead to the European Central Bank (ECB) meeting later on Thursday amid expectations that the central bank would avoid elaborating on its plans to taper its asset-purchase program.
Today, the U.S. is to produce reports on initial jobless claims and manufacturing activity in the Philadelphia region.
Gold
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Gold prices gave back some of their recent gains on Wednesday, as the dollar recovered but stayed close to 10-month lows.
The drop in gold was limited by expectations, fueled last week by the testimony of US Federal Reserve Chair Janet Yellen, that any monetary tightening in the US would happen slowly and reports from China that suggested growth is slightly ahead of target for the year.
The precious metal was trading close to 3-week highs on Wednesday close to the $1240 area.
Today, the focus is shifted towards reports on U.S. jobless claims and manufacturing activity in the Philadelphia region.
WTI Oil
Crude futures gained on Wednesday, as investors welcome data showing supplies of U.S. crude fell by more-than-expected, raising expectations that an increase in demand during the second-half of the year would reduce some of the market surplus.
Inventories of U.S. crude fell by roughly 4.7m barrels in the week ended July 14, surpassing expectations of a 3.2m barrels drop. This was a third-straight week of falling crude inventories.
Despite the better-than-expected drop, crude oil and gasoline inventories remain in the upper half of the average range for the time of year, the EIA said.
Energy traders now focus on active US oil rigs due to be reported on Friday and on progress from OPEC members regarding production cuts.
US 500
The main U.S. indices were higher on Wednesday, as gains in the Oil & Gas, Basic Materials and Healthcare sectors led shares higher.
At the close in NYSE, the Dow Jones Industrial Average rose 0.31%, while the S&P 500 index gained 0.54%, and the NASDAQ Composite index gained 0.64%.
Some of the best performers of the session were EI du Pont de Nemours & Co which rose 1.61% and Boeing (NYSE:BA) Co which added 1.27%. Some of the worst performers of the session were IBM (NYSE:IBM) which fell 4.20% Wal-Mart Stores Inc (NYSE:WMT) declined 0.43% and Goldman Sachs Group (NYSE:GS) was down 0.20%.
Market participants look ahead to the release of two economic reports on Thursday, which may offer further guidance on the strength of manufacturing and the U.S. labor market.
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