Dollar Plunges on Fed Officials Comments

USD

The dollar index which measures the greenback against a basket of major currencies plunged to a two-week low of 96.67 on the surprisingly ultra dovish comments of the New York Fed President John Williams. William stated that it is better to take a preventative approach than to wait for disaster. Investors' understood his comments as if he is hinting for a coming crash, and the Fed should act fast to prevent it. As a result, the chances of an interest rate cut in July by 50 basis points rose to more than 50%, driving the dollar down. The NY Fed tried to modify the president's message by saying that his comments were academic and not a policy direction. The USDJPY tumbled to a three-week low of 107.20, the EURUSD climbed to a high of $1.1282, and the GBPUSD edged higher towards $1.2558.

Metals

Metals prices soared as the dollar and US yields dived on aggressive rate cut prospects. The price of a gold ounce rose to a fresh six-year high of $1452, the price of a silver ounce climbed to a thirteen-month high of $16.44, while palladium retreated to $1510.

Oil

Oil prices erased partial losses amid escalating geopolitical tensions in the Gulf. The US Navy announced yesterday that it destroyed an Iranian drone in the Strait of Hormuz. The incident raised investors' concerns over the passage of oil supplies in one of the major checkpoint for global crude flows. On the other hand, the rising probability of larger rate cuts by the Federal Reserve in July following the comments of NY Fed's president also supported prices. The West Texas Intermediate crude futures bounced off a key support zone of $54.80 to trade higher at $56.46, and Brent futures edged higher to $63.33.

Major Economic Events

Disclaimer 

The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM.COM. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.