2019-11-11 • Updated
The US dollar index (DXY) got support at 92.80 last week and went up to consolidate between 93.20 and 94.00.
The minutes of the Federal Reserve’s July meeting showed that most central bank officials supported a move towards unwinding the Fed's massive balance sheet in September. The $4.5 trillion balance sheet was built up after the financial crisis to keep borrowing costs low. In addition, markets closely follow the Fed’s discussion about inflation, which has recently shown signs of weakness. Opinions within the Fed slightly differ on this point: some members think that the softness in prices is temporary, while others worry that it will take longer than expected for inflation to rise to 2% target. As a result, the odds are that the Fed will delay a rate hike until inflation picks up. This is not very inspiring for the USD.
In the upcoming days, pay attention to new home sales and crude oil inventories on Wednesday, existing home sales on Thursday and core durable goods orders on Friday. In addition, at the end of the week, world's major central bankers will gather at the Fed’s Jackson Hole Symposium. The Fed Chair Janet Yellen will speak on the topic of financial stability at 17:00 MT time on Friday.
Note that political turmoil in Trump’s administration and the market’s risk aversion will likely reduce the impact of any positive statistics from America and keep the US currency under pressure.
Despite the recent recovery, DXY is still not far from its 13-month lows hit at the beginning of August. It looks like the greenback is correcting up within the general downtrend. A decline below 93.20 will open the way down to 93.00 and 92.50 (200-week MA). Resistance is at 94.00 ahead of 94.90 (50-day MA).
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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