Dollar Steady ahead of awaited US/China talks

Equities

Major US indices ended higher on Friday for the second consecutive day on the optimism from an anticipated trade talk between China and the United States which could put an end to the trade war woes that have been affecting the markets since the beginning of the year. The Dow Jones Industrial Average posted its highest close since February of 25669, SPX 500 gained 0.3% to 2850, and the tech-heavy Nasdaq Composite closed slightly higher at 7816. The positive bias continued through today’s Asian session, the Dow Jones traded at a high of 25741, and the SPX500 climbed to a two-week high of 2854. The US stock market will remain vulnerable to any developments regarding the awaited talks.

USD

The dollar index which measures the greenback against a basket of major currencies fell for the second consecutive day, as the index retreated from a fourteen-month high post the announcement of anticipated trade talks between China and US. The trade tensions between the United States and its rivals gave strength to the US dollar. However, a trade deal could lead to flow to risky investments where the dollar could suffer. DXY traded at a high of 96.98 during last week and retreated to a one-week low of 96.09. The dollar recovered slightly during the Asian session as the Turkish lira weakened bringing back the crisis to the lights. The USDTRY traded at a high of 6.11. The EURUSD fell from a one-week high of $1.1444 to trade below $1.1420. It is a busy week for the dollar, as we await the trade talks, FOMC meeting minutes, and the Jackson Hole Economic Symposium.

Metals

Gold prices rebounded from a low of $1172 to settle a high of $1186 and post its biggest one-day gain since April. The precious metal was on the backfoot since mid-April due to a stronger dollar and higher US Treasury yields. The bullion ended lower for nine out of ten past weeks to lose more than eight percent. On the other hand, the silver ounce finished lower for the tenth consecutive week where it traded at $14.33, its lowest level since February 2016.

Oil

Oil prices rose for the second consecutive day to recover from the drop that occurred due to the buildup in US crude inventories. The news that Saudi Arabia reduced its production in the past months to avoid oversupply provided support to the prices. The West Texas Intermediate crude futures settled at $65.93 per barrel and the Brent futures closed at $71.79 per barrel. The U.S. energy services firm Baker Hughes reported that the US oil rig count was unchanged at 869.

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