US Dollar and Treasury Yields Move Lower on Global Growth Concerns

USD

The dollar index which measures the greenback against a basket of major currencies fell 0.6% to 96.43. A wave of dollar selling started as the Fed vice chairman Richard Clarida said that the Fed is getting closer to "neutral" interest rate levels. The Federal Reserve could need to reassess the interest rate path as the global economic indicators continue to signal a global economic slowdown ahead. DXY traded at a sixteen-month high during the week supported by the uncertainty surrounding the Brexit deal and the Italian budget. However, the dovish comments from Fed officials lowered the expectations of two interest rate hikes in 2019 which drove the dollar and treasury yields lower. The chances of a rate hike towards 2.75-3.00% level through the second half of 2019 fell to less than 25% from 35% earlier during the week. The US 10-year yields dropped to a six-week low of 3.053%. The USDJPY lost 0.71% to 112.82, and the EURUSD gained 0.8% to $1.1416.

GBP

The British pound strengthened against the United States dollar to recover from heavy losses incurred on Thursday. Early last week, the pound advanced against major currencies as Theresa May unveiled a draft Brexit text and won her Cabinet's approval. However, the resignation of Dominic Raab, the Secretary of State for Exiting the European Union, and the criticism of the draft agreement by both pro-EU and pro-Brexit lawmakers triggered heavy selling where the cable traded at a two-week low of $1.2723. Despite the latest bounce, the currency could remain under pressure until the market participants obtain more clarity on the progress of the divorce deal.

Metals

Metal prices spiked as the dollar declined along with the US Treasury yields. The precious metal advanced following the comments of Fed officials on the interest rate path.  The gold ounce earned 0.7% to $1221, and the silver ounce appreciated by 0.8% to $14.39.

Oil

Oil prices settled lower for the sixth consecutive week, weighed down by higher supply and slower demand due to the weakening global economic activity. However, at the end of the week, oil prices bounced-off their lows on reports that OPEC and Russia are planning to cut supply towards the end of the year to sustain a balanced market. The West Texas Intermediate crude futures rose 0.8% to $57.02, and the Brent futures advanced 0.4% to $66.92.

Major Economic Events

 
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