Dollar looks better due to Fed minutes

Daily Analysis - 18/10/2018

The dollar was firmer against its major competitors

On Thursday the popular US currency (USD) was stronger versus its main rivals following minutes from the U.S. FED September conference repeating the expectations that the central bank is possible to continue the rate hikes this year.

Despite Donald Trump's opinion about the hikes that have already gone too far the meeting revealed that every Fed policymaker supported raising interest rates but also, in general, they all agreed borrowing costs were set to increase further.

Interest rate futures are now rating in an 83% probability that the Fed hike rates in December and that will be the fourth hike this year. Two more increases are expected next year.

On Thursday the dollar index, which estimates its value versus 6 major peers, traded at 95.65, up 0.08%.

European markets seen mixed

Market attention lately is largely adjusted to continuing Brexit discussions, while negotiations over UK withdrawal from the European Union continue to be an important obstacle. On Wednesday evening U.K. Prime Minister Theresa May spoke to EU heads in Brussels and gave guarantees to both sides that she could still strike a deal.

But, leaders at the Brussels event were left frustrated because England failed to propose any new suggestions to open the troubled Irish border question. Both sides have accepted and agree to continue negotiating, though it was decided inadequate. The FTSE 100 is assumed to begin around 2 points higher at 7,054, while both the DAX and CAC saw little change at 5,143 and 11,714 respectively.

US oil edges up

London Brent crude for December distribution went up 13 cents, at $80.17, having ended down 1.7%

October delivery for U.S. West Texas Intermediate crude went up 12 cents, or 0.2 %, at $69.86 a barrel after dropping 3% in the previous session to end under $70 for the first time in 30 days.

U.S. crude stocks increased to 6.5 million barrels last week. On Wednesday, the U.S. Energy Information Administration said the fourth straight weekly build and almost triple what analysts had forecast.

"The impact of the inventory-jump weighed on the market and oil seems bearish," said Kaname Gokon, a trader in Japan.

"The United States may have to go ahead with sanctions on Saudi Arabia, which could push prices higher, but Russia and other producers are set to increase supplies."

Gold holds tight range

On Thursday Gold prices were in a constant narrow range while Asian shares eased as the greenback firmed after minutes of the Federal Reserve's September conference strengthened expectations of a tighter U.S. monetary policy.

Federal Reserve policymakers are broadly united on the urgency to raise borrowing costs more, minutes from their most recent policy conference revealed, raising expectations the committee will hold to its hawkish position on raising interest rates.

Spot gold was up 0.1% at $1,223.77 an ounce, hanging close to its highest since July 26 at 1,233.26 an ounce hit on Monday.

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