Daily Analysis - 18/07/2018
The US dollar strengthened across the board after Federal Reserve President Jerome Powell’s testimony to the US Senate on Tuesday. Powell backs more rate hikes and said the US economy is growing considerably stronger. The greenback’s strength led to gold prices sinking to a one-year low.
USDJPY surged to its highest level in six months, peaking above the key 113-yen level as Jerome Powell was positive about the US economy when speaking to the US Senate Banking Committee. The dollar was the best performing major currency this morning. He sees years more of steady growth in the US. The Dow gained and the Nasdaq hit record highs on Powell’s comforting words.
The recent losses in crude oil prices probably suggests the market has topped out and global oil production is back on the rise after some recent outages from producing countries. Markets are reacting to news that Saudi Arabia will ramp up production, while US President Trump’s threats earlier this week that he would release emergency supplies also helped place oil under pressure. Focus today will be on the EIA crude oil inventory report.
Sterling is weakening due to the ongoing Brexit fiasco. UK Prime Minister Theresa May managed to fend off a rebellion in her cabinet by threatening a new general election if they didn’t’ back her Brexit plan, as reported by the Times newspaper. May narrowly won a crucial parliamentary vote on part of her Brexit proposals on Tuesday. The pound is still vulnerable to Brexit related headlines but there will be a slight distraction today from this as focus turns to UK CPI data.
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