Greenback Extends Losses as Data Suggest Lower Interest Rates

USD

The dollar index which measures the greenback against a basket of major currencies settled lower for the second consecutive day on weaker price data. DXY traded at a one-week low of 97.75. The softer GDP Price Index reading triggered selling pressure and continued following the release of the PCE Price Index which is considered as the Fed's favorite inflation gauge. The Core PCE Price Index YoY came in at 1.6%, the lowest reading in a year, missing the expectation of 1.7%. The drop in inflation numbers boosted the probability for lower interest rates before year-end. The Federal Open Market Committee kicks off a two-day monetary policy meeting today. The US 10-year Treasury yields slipped to 2.501%, the USDJPY tumbled to 111.27, and the EURUSD climbed to a one-week high of $1.1194.

Metals

Gold prices edged higher following soft US economic data. The drawdown in inflation figures boosted the demand for the precious metal due to the suggestions that the Fed could be forced to ease the monetary policy if inflation dropped further. The price of gold ounce bounced off a low of $1278 to trade higher at $1284. Meanwhile, silver dipped below $15 again to erase Friday's gains, and Palladium crashed to $1370 losing more than 6%.

Oil

Oil prices recovered slightly from Friday's heavy losses as the U.S. proceeds to end Iran's oil wavers. The Trump administration restated that Saudi and other allies will cover the lost supply. However, Saudi Energy Minister announced that the OPEC+ cut deal could be extended till year end. The West Texas Intermediate crude future rose to a high of $63.68, and Brent futures hovered near $72. Market participants await the release of the weekly US crude oil stock by the American Petroleum Institute.

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