Dollar Holds Steady Ahead of Fed Meeting

USD

The dollar index which measures the greenback against a basket of major currencies ended flat on Monday after recovering from a low of 93.84. The dollar index was under pressure as the president of European Central Bank Mario Draghi delivered a speech about the economic projections and monetary policy ahead of the European Parliament Economic and Monetary Affairs Committee. Draghi said that labor markets are tightening and that the pick-up in wage growth will continue. The EURUSD rose to a high of $1.1815, the highest since mid-June. However, the pair pared gains to the close as the U.S. 10-year Treasury yields rose to 3.093 ahead of an anticipated rate hike by the Federal Reserve.

Equities

Wall Street finished mostly lower, weighed down by the new phase of the trade war between the United States and China, and higher U.S. Treasury yields. The latest tariffs imposed by the Trump Administration took effect, and China retaliated with new tariffs. The Dow Jones Industrial Average fell by 0.7% to 26562, the SPX500 lost 0.4% to 2919, whereas the tech-heavy Nasdaq Composite reversed losses and settled slightly higher at 7993.

Metals

Gold prices remain stuck in a tight trading range ahead of Fed policy meeting. The gold ounce is trading in a range between support of $1188 and resistance of $1214. The Federal Reserve will conclude its two-day monetary policy meeting tomorrow, and Chairman Powell will hold a press conference which could be a catalyst for the bullion to breakout. The silver ounce settled slightly lower at $14.23.

Oil

Oil prices edged higher, supported by the looming U.S. sanctions on Iran and the unwillingness of OPEC to raise output. The Brent futures rose to a four-year high of $81.67, and the West Texas Intermediate futures traded at a high of $72.71. OPEC and non-OPEC energy ministers concluded their meeting on Sunday with no formal recommendation for raising production. On the other hand, the American Petroleum Institute will report the U.S. weekly crude oil stock later today.

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