Dollar Index Erases Gains as FOMC Minutes Reiterates Dovish Tone

USD

The Dollar Index which measures the greenback against a basket of major currencies erased gains following weaker inflation and Fed's dovish minutes. The March Core Consumer Price Index rose only 0.1% versus an expectation of 0.2%, while the year on year reading dipped to 2.0% from 2.1% prior. On the contrary, the latest surge in oil prices boosted the normal pushed the Consumer Price Index 0.4% versus an expectation of 0.3%. The Federal Reserve released the minutes of the last FOMC meeting. The minutes confirmed the Fed's dovish policy stance as most of the members believed that rates would remain on hold through 2019. Several Fed officials will be delivering speeches today, any comments on interest rates could possibly affect the dollar. The US 10-year yields remained below 2.50%, and the USDJPY hovered near 111.

EUR

The Euro finished marginally higher against the US dollar in a choppy trading day. Market participants were awaiting the European Central Bank monetary policy meeting and Draghi's presser. The bank left policy unchanged while restating that interest rates will remain at their low level at least through the end of 2019. In his press conference, the ECB president Mario Draghi noted the drop in the economic activity, though he believes that the risks of recession remain low. The EURUSD rallied to $1.1284 after testing the support zone at $1.1230, and the EURNZD hovered above 1.67.

GBP                                                                                  

The British pound advanced insignificantly against rivals as the EU granted another Brexit deadline extension. The Brexit deadline has been shifted to October first, diminishing the chances of the UK leaving the EU without a deal this week. However, the UK could leave the EU anytime if the withdrawal agreement is ratified. Theresa May will try her best to get a deal approved by the UK parliament to avoid participating in the EU parliamentary elections. The GBPUSD edged higher towards the resistance level of $1.3120, and the GBPJPY ended its four-day losing streak and tested a high of 145.70.

Metals

Metals prices inched higher as the dollar erased gains and Treasury yields remained in check. The gold ounce rose to a two-week high of $1310, the silver ounce settled almost flat at $15.20, while palladium failed to close above $1400 and finished at $1390.

Oil

Oil prices finished marginally higher despite the surge in the US crude oil inventories. The Energy Information Administration reported that the weekly US crude oil inventories jumped 7.029 million barrels last week to 456.6 million barrels. Moreover, US oil production remained at a record high of 12.2 million barrels per day. OPEC-led supply cuts and US sanctions on Venezuela and Iran are offsetting the impacts of higher US output. The West Texas Intermediate crude futures rallied to $64.68, and Brent futures rose to a fresh five-month high of $71.76.

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