This week, the dollar started with a negative bias as the failed Doha meeting on oil production cuts triggered a risk-off trade in Asia.The US dollar continued to weaken head of the Fed meeting next week and this week’s ECB press conference is also of interest to traders.
- Oil and GOLD: Oil remains supported by the production workers strike in Kuwait but prices are expected to tumble after the DOHA meeting. Crude oil is trading at 41.47 while Brent Oil added 42 cents to 43.33. With the failure of OPEC and other major oil-producing nations to reach a deal to cap output, focus shifts to the U.S. industry’s role as a relatively new “swing producer.” Gold retained sharp overnight gains on Wednesday as disappointing U.S. housing data dented the dollar and supported the Federal Reserve’s cautious stance on interest rates trading around 1250$
- Stocks: Dollar index dived sharply yesterday and is back pressing 94 handle and the development suggests that recent down trend from 100.51 is going to dip extend lower through 93.62 support. U.S. stock indices were mostly higher on Tuesday, following strong buying in Asia and Europe. The S&P 500 cash index topped 2100.00 on an intraday basis for the first time since December 2, 2015.
- Currencies: The Canadian dollar is trading at 1.2645 levels not seen since July 2015. The high correlation between crude and the CAD is well known and has intensified as oil producers were near an agreement to freeze oil output at January levels.The US Dollar traded higher against the Japanese Yen with the USD/JPY reaching an intraday high at 109.483 before falling back to 109.344.The AUD/USD rose to .7802, its highest since last June and up .63 on the day. Similarly, the NZD/USD jumped 1.3 percent to .7015.
Looking ahead, UK job data will be the main focus in European session today while Germany will release PPI. Swiss will release ZEW expectations. US will release existing home sales.
