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The US dollar goes up against most major currencies

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us dollar goes up

The US dollar goes up against the euro, yen, and pound sterling in trading on Monday as the market awaits the Federal Reserve (Fed) meeting. 

Most experts believe the Fed will raise its benchmark interest rate by 75 basis points (bps) at the end of its September 20-21 meeting because August inflation statistics showed a slower-than-expected slowdown in consumer price growth in the United States. This contributes to the US dollar going up. 

The euro, yen and pound to the dollar are at multi-year lows amid a sharp tightening of monetary policy by the Fed, which is encouraging global investors to invest in U.S. assets, whose yields are rising along with the rise in the prime rate.

Does the dollar go up in prices and what is really going on?

The unfavorable economic outlook in other regions is supporting the dollar. For example, Europe is facing an energy crisis, while in China the economic growth has been severely weakened by tight quarantine restrictions as well as a downturn in the real estate market.

The yuan, however, is unlikely to weaken sharply against the dollar before the Chinese Communist Party’s annual event scheduled for mid-October, experts at Goldman Sachs Group Inc. said. “The authorities would prefer stability ahead of a key political event,” Goldman said in a review. At the same time, analysts expect the slow weakening of the yuan to continue in the near term amid a general strengthening of the dollar.

The calculated ICE index that shows the dollar trend against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling and the Swedish krona) added 0.17% on Monday, while the broader WSJ Dollar Index gained 0.28%.

The ICE Dollar Index is up more than 14% since the start of 2022 and could show its biggest gain this year since it began calculating it in 1985; Dow Jones notes.

We previously reported on why the dollar is so strong right now.

Forex

Current gold prices combined above $1,700 an ounce

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current gold prices

Current gold prices rose on Tuesday morning; the price was above $1,700 dollars per troy ounce, according to trading data.

The price of December gold futures on the New York Comex Exchange rose by $6.85, or 0.4%, to $1,708.85 per troy ounce. December silver futures rose 1.53% to $20,905 per ounce.

Daily gold prices were supported by a decline in yields on U.S. government bonds. Thus, the yield on ten-year government bonds (U.S. Treasuries) fell to 3.615% from the previous close of 3.651%, while at the beginning of Monday’s trading the indicator exceeded 3.8%.

U.S. Treasuries are an alternative investment to gold, which is why their quotes tend to move in different directions. As a result, gold gained 2.3% on Monday, from $1,670 to $1,710.

Earlier, we reported that oil rises in anticipation of possible OPEC+ production cuts.

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Forex

Oil price rises in anticipation of possible OPEC+ production cuts

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price of oil rises

The price of oil rose on Tuesday as markets await an agreement from the OPEC+ meeting on a major production cut that will temper the impact of worries about the global economy.

Why is oil rising today?

Oil prices jumped more than $3 on Monday amid reports that OPEC+ will consider production cuts of nearly 1 million bpd at the cartel’s first off-line meeting since 2020 on Wednesday.

Brent crude futures rose 0.54% to $89.34 a barrel, while WTI crude rose 0.43% to $83.97 a barrel.

Voluntary reductions in oil production by individual OPEC+ member countries will be counted on top of the overall agreed quota cut, which could be the largest reduction since the pandemic began.

“Despite everything going on in Ukraine, OPEC+ has never been stronger, and they will do everything they can to provide price support,” OANDA’s Edward Moya wrote in a research note.

“While OPEC+ may be announcing a production cut of more than 1 million bpd, in reality the cuts could be much smaller. This is due to the fact that most OPEC+ members are already well below target levels,” ING analysts said in a note.

Rising prices may be limited by concerns about the state of the world economy and the desire of investors to lock in profits from the previous session, said Tina Teng of CMC Markets.

Earlier we reported the most important Forex news for October 3.

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Forex

Most important forex news: what you need to know on October 3

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important news for forex trading

Most important forex news: markets were relatively calm on Monday during Asian trading hours, but volatility increased in the early European morning. Market participants are closely watching the political developments in the UK ahead of S&P Global publishing its final September PMI indices for Germany, Eurozone, the UK, and Canada. 

Important news for forex trading – what should a trader look out for?

Let’s take a look at important news for forex trading. At the end of the day, the US will release the ISM manufacturing PMI for September. Several FOMC policymakers, including Kansas City Fed Governor Esther George and New York Fed Chief John Williams will also make speeches later in the day.

After a modest rise on Friday, the U.S. dollar index turned south and broke below 112.00. U.S. stock index futures are trading mixed in the European session, and the benchmark 10-year U.S. Treasury bond yield is losing more than 1 percent, falling below 3.8 percent.

In Asian trading hours, data from Japan showed that the Tankan Large Manufacturing Business Activity Index fell to 8 in the third quarter, missing market expectations of 11. On the positive side, the non-manufacturing business activity index rose to 14 in the same period from 13. 

Meanwhile, Japan’s Finance Minister Shunichi Suzuki reiterated that the government keeps a close eye on exchange rate fluctuations. USD/JPY reacted to Suzuki’s comments.

Earlier we reported that American dollar rate declines against the euro and pound, and goes up against the yen.

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