US Dollar Recovers ahead of Fed Rate Decision

Equities

Major US indices closed higher on Tuesday supported by the news that the Trump administration made a little progress with China to solve the trade disputes. However, during the Asian session, an unnamed source stated that the Trump administration is planning to raise the tariffs on $200 billion of Chinese imports from 10% to 25%. The Dow Jones Industrial Average fell from a high of 25431 and traded at a low of 25327. By imposing tariffs, Trump is trying to have better negotiations so he will be able to reach a better fair trade deal.

USD

The dollar index which measures the strength of the greenback against a basket of major currencies bounced-off a one-week low of 94.16 to settle at 94.55 ahead of the Fed interest rate decision today. DXY ended a two-day losing streak after strong economic data from the United States. USDJPY traded at a two-week high of 112.13 ahead of the European session. The pair rallied due to the strength of the US dollar and dovish tone of the Bank of Japan meeting yesterday. The ADP Employment Change, ISM manufacturing PMI along with the Fed rate decision and statement are due today.

Metals

Gold prices retreated from a three-day high of $1228 to trade at a two-week low of $1214 and close higher at $1224. In the past three days, the price action of gold showed that the lack of major fundamental news is forcing the precious metal to trade in a range between the 2018 low of $1212 and the 200-week simple moving average of $1235. The bullion could find some support if the Fed holds a dovish tone in today’s statement. On the other hand, the silver ounce is trading slightly lower at $15.45.

Oil

Oil prices tumbled as data showed that U.S. stockpiles of crude rose last week. The American Petroleum Institute reported that the US crude oil stock rose by 5.590 million barrels versus an expectation of a drop by 3.160 million barrels. The crude futures fell from a high of $70.19 to settle at $68.39, and the Brent futures retreated from a three-week high of $75.58 to close at $74.04. The US Energy Information Administration will report the official data today.  

Major Economic Events

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.