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Dollar Declines To 2-Week Lows On Fed's Inflation Concerns

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USD

On Thursday, The Greenback declined to two-week lows vs. a basket of major currencies amid fresh uncertainty over a potential U.S. rate rise before the end of the year. According to the minutes of the U.S. central bank’s last policy meeting on Sept. 19-20, many policymakers believe additional tightening will depend on upcoming inflation data. Nevertheless, many policymakers still felt that another rate increase this year “was likely to be warranted,” the Fed said.

On the release front, markets are awaiting producer price inflation and U.S. jobless claims due later in the day.

  • The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.08% at 92.941 pips.

Euro 

The single currency manages to maintain its gain and settling  to a two-week high after a large number of strong data that supported a growing view that the ECB will announce a plan to reduce its huge stimulus at a policy meeting later this month. On the release front, Euro-zone industrial output rose more than expected in August as production of capital goods, rose sharply, which could be a good news for economic growth in the second half of the year.

GBP

The Sterling pound rose 0.9% to settle at 1.3230,

JPY

The JOY rose as much as 0.20% vs. the Greenback as the minutes of the Federal Reserve's September policy meeting showed some uncertainty still about a December rate hike among some FOMC members, though the overall view was still sound for the hike. In addition, the Japanese yen supported following reports Japanese Prime Minister Shinzo Abe's ruling party could maintain its parliamentary majority at the 22nd October snap election. On the economic data front, Japanese PPI rose 0.2% (MoM) in September and bank credit growth rose by 3.0% (YoY), supported the bid surrounding the domestic currency.  

Gold

Gold prices rose slightly, extending gains from the previous session thanks to weak U.S. dollar after minutes from the U.S. FOMC’ September policy meeting revealed low inflation worries.  Meanwhile, Spanish Prime Minister Mariano Rajoy gave the Catalan leadership 8-day deadline to drop independence bid or else face losing its political autonomy. However, Many political analysts believe that pro-separatist Catalan President Carles Puigdemont will not back down. Gold Futures - Dec 17 rose as much as 0.77%, to settle at $1,298.85.   

Oil

Earlier today, Oil prices edged lower as U.S. fuel inventories increased and despite OPEC's efforts to cut production. Oil prices settled lower after data late Wednesday showed that U.S. crude inventories rose unexpectedly last week, decreasing recent signs that the market is tightening, while traders are awaiting U.S. fuel inventory data later on today.

Crude Oil WTI Futures - Nov 17 fell as much as 0.80%, to settle at $ 50.89, while Brent Oil Futures - Dec 17 was down 0.51%, at $ 56.66.

Economic Calendar (all times in GMT)

  • EUR ECB President Draghi participates in panel in Washington: (GMT 14:30) – Important
  • USD DOE U.S. Crude Oil Inventories (OCT 06): (GMT 14:30) – Important – Forecast (-1277.38k) – Previous (-6023k).

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