Fundamental Analysis

Economic Data in Focus Post Trump-Kim Historic Summit

June 12, 2018
The greenback soared against its major peers ahead of key economic data. The dollar index which measures the strength of the dollar against a basket of six major currencies, traded at a four-day high to break above the 200-hour simple moving average for the first time in a week. The dollar earned support from the historic summit between the United States and North Korea where the dollar traded at a three-week high against the Japanese Yen. However, the main focus now is on the economic reports from the United States. The Consumer Price Index is due today where analysts expect the inflation numbers to tick higher. The Federal Reserve will commence a two-day meeting today, and the majority of analysts expect to conclude this meeting with an interest rate hike.
The Sterling fell for the second consecutive day against the United States dollar after disappointing industrial and manufacturing data. The British factory output experienced its biggest monthly drop since 2012. The Cable suffered an eight percent drop since mid-April due to the soft economic reports that suggested that the economy is losing momentum which will delay any tightening steps in the monetary policy of the Bank of England. Pound traders will be eyeing the United Kingdom jobs report today, especially the Average Earnings Index including bonus.
Gold prices remain in a tight consolidation pattern ahead of FOMC decision tomorrow. The summit between the United States and North Korea helped prices trade in a seven dollars range for the past 24 hours. From a technical analysis perspective, the Average True Range of a fourteen-day period dropped to $9.2, the lowest since January 2018 and close to the lowest levels since September 2007.
Oil prices rose slightly on the positive outlook of the summit between the United States and North Korea. Oil prices were under pressure for the past two weeks due to the rise in oil production from Russia, Saudi Arabia, and the United States. Also, other market participants are looking forward to increasing their output, which could affect prices negatively. The US crude oil stock from the American Petroleum Institute (API) is due today.

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