Dollar Remains Soft Ahead of Fed Minutes

USD

The dollar index which measures the greenback against a basket of major currencies fluctuated near its lowest level since late February, at 89.70. The recent soft economic data out of the United States suggested that the Federal Reserve will continue with the current policy measures for an extended period to reach proper levels of growth and employment. However, rising inflation could threaten these prospects. Market participants are looking forward to the Federal Reserve meeting minutes for hints on when the Fed is willing to discuss tapering, and whether members are in discomfort with the current asset purchases. The EURUSD rose to $1.2245, the GBPUSD soared to $1.4220, and the USDJPY dipped to 108.82.

Equities

Futures tied to major US stock indices drifted lower, surrendering partial gains achieved late last week. Investors are in a dilemma as economic data such as employment reports and retail sales suggest further support to the economy, while inflation is ticking higher which could urge intervention by tightening policy. The FOMC meeting minutes could give some clarity on the Fed's plans. But it is good to keep in mind that these minutes are for the meeting that took place ahead of the recent jobs report. The Dow Jones Industrial Average futures dropped to 33817, the S&P500 futures fell to 4099, and Nasdaq futures declined to 13099.

Metals

Precious metals prices remained upbeat as the dollar and Treasury yields softened. The price of a gold ounce rose to 1875, the highest since early January as investors seek an inflationary hedge with the Fed's unwillingness to act. The price of a silver ounce hit $28.75, the highest since early February, while palladium held ground near $2900.

Oil

Oil prices dropped sharply after trading near their highest level since March. Several news platforms reported progress in the Nuclear deal citing the Russian envoy, driving oil prices down significantly. However, the Russian envoy clarified that there is progress but hurdles are still there. On the other hand, the American Petroleum Institute reported a buildup of 0.620 million barrels in US oil stock. The US Energy Information Administration will report the official figures later today. The West Texas Intermediate crude July future dipped to $64.54, and the Brent blend July contract fell to $67.73.

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