Dollar Recovers Well After Hitting Over 2-year Low, Gains Against Peers

Trading 01 août 2020 Commentaire »

After plunging to its level in more than 2 years in the Asian session on Friday, the U.S. dollar rallied sharply to score fairly impressive gains against most of its peers, as risk sentiment faded a bit amid rising concerns about the economic impact of the virus outbreak.

A report released by the Commerce Department showed personal income in the U.S. slumped by more than expected in the month of June. The report also showed a substantial increase in personal spending.

The report said personal income tumbled by 1.1% in June after plunging by a downwardly revised 4.4% in May. Economists had expected personal income to decrease by 0.5% compared to the 4.2% nosedive originally reported for the previous month.

The report said personal spending surged up by 5.6% in June after skyrocketing by an upwardly revised 8.5% in May. Personal spending had been expected to jump by 5.5% compared to the 8.2% spike originally reported for the previous month.

Consumer sentiment in the U.S. deteriorated by more than initially estimated in the month of July, according to a report released by the University of Michigan on Friday. The report said the consumer sentiment index for July was downwardly revised to 72.5 from the preliminary reading of 73.2. The index is down from 78.1 in June and below economist estimates for a reading of 73.0.

The dollar index, which slipped to 92.55, rallied to 93.54 in late afternoon trades, adding more than 0.55% to its overnight level.

Against the Euro, the dollar strengthened to $1.1765, gaining about 0.7%. The euro area economy contracted at the fastest pace on record in the second quarter amid the coronavirus pandemic, preliminary flash estimate published by Eurostat showed Friday. Gross domestic product fell 12.1% on a quarterly basis, bigger than the 3.6% drop in the first quarter. This was bigger than the economists' forecast of 11.2% and was the sharpest decline seen since the series began in 1995.

Year-on-year, GDP was down 15% in the second quarter versus a 3.1% decline a quarter ago. GDP was expected to fall 13.9%.

The Pound Sterling was down marginally with the dollar firming up to $1.3087 a unit of Sterling.

The Japanese Yen tumbled to 106.05 a dollar and recovered slightly to 105.95 subsequently, but was still down with a sharp loss of about 1.15%.

Against the Aussie, the dollar firmed up to $0.7141, gaining 0.75% from Thursday's close of $0.7195.

The Swiss franc was weaker at 0.9139, losing ground its previous close of 0.9089.

The Loonie was flat at 1.3415 a dollar, giving up gains, after trading at 1.3372 a dollar at one stage. Data released by Statistics Canada this morning showed the Canadian economy grew 4.5% over a month earlier in May 2020, recovering from a record 11.6% contraction in April and compared with market expectations of a 3.5% expansion.


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Crude Oil Futures Settle High

Trading 01 août 2020 Commentaire »

Crude oil futures closed higher on Friday, bouncing back from losses in the previous session, buoyed by a report from U.S. Energy Information Administration that said oil production fell sharply in May.

However, concerns about energy demand outlook due to continued worries about the economy amid the rapid spread of coronavirus pandemic, and mixed economic data from several parts of the world limited oil's upside.

A likely uptick in production as OPEC and allies prepare to relax output curbs by 2 million barrels a day from Saturday too capped oil's rise.

West Texas Intermediate Crude oil futures for September ended up $0.35 or about 0.9% at $40.27 a barrel.

Brent crude futures moved up $0.24 or about 0.7% to $43.18 a barrel.

According to the monthly report from EIA, crude oil production in the U.S. fell a record 2 million barrels per day to 10 million barrels per day.

According to a report from Baker Hughes, the number of U.S. oil rigs dropped by one to 180 this week.


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Treasuries Finish Choppy Trading Day Little Changed

Trading 01 août 2020 Commentaire »

After moving notably higher in the previous session, treasuries showed a lack of direction over the course of the trading day on Friday.

Bond prices bounced back and forth across the unchanged line before closing little changed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 0.536 percent.

The slight decrease on the day still pulled the ten-year yield down to its lowest closing level in well over four months.

The choppy trading on the day came as traders kept an eye on developments in Washington, where negotiations over a new coronavirus stimulus package have seemingly stalled.

With the Republican-controlled Senate adjourning for the weekend on Thursday, a $600 weekly federal unemployment benefit is set to expire at the end of the day.

Democrats rejected a temporary extension of the jobless benefit, with Senate Minority Leader Chuck Schumer claiming a one-week extension "can't be implemented in time."

Lawmakers appear at an impasse as the attempt to reach a compromise between a $1 trillion GOP relief proposal and the $3.4 trillion bill passed by the Democratic-controlled House in May.

On the U.S. economic front, the Commerce Department released report showing personal income slumped by more than expected in the month of June, although the report also showed another substantial increase in personal spending.

The Commerce Department said personal income tumbled by 1.1 percent in June after plunging by a downwardly revised 4.4 percent in May.

Economists had expected personal income to decrease by 0.5 percent compared to the 4.2 percent nosedive originally reported for the previous month.

Meanwhile, the report said personal spending surged up by 5.6 percent in June after skyrocketing by an upwardly revised 8.5 percent in May.

Personal spending had been expected to jump by 5.5 percent compared to the 8.2 percent spike originally reported for the previous month.

A separate report from the University of Michigan showed consumer sentiment deteriorated by more than initially estimated in the month of July.

The report said the consumer sentiment index for July was downwardly revised to 72.5 from the preliminary reading of 73.2. The index is down from 78.1 in June and below economist estimates for a reading of 73.0.

"Consumer sentiment sank further in late July due to the continued resurgence of the coronavirus," said Surveys of Consumers chief economist Richard Curtin.

Developments in Washington are likely to remain in focus next week, although traders are also likely to keep a close eye on the Labor Department's monthly jobs report.

Reports on manufacturing and service sector activity, construction spending, factory orders, the U.S. trade deficit, and weekly jobless claims may also attract some attention.


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Gold Futures Settle At Fresh Record High

Trading 01 août 2020 Commentaire »

Gold futures settled at a record high on Friday as worries about global growth amid fears of re-imposition of lockdown measures due to spikes in coronavirus cases across the world.

Recent disappointing economic data from the U.S. and Europe also prompted traders to seek the safe-haven asset.

The dollar's strength somewhat limited gold's gains. The dollar index rose to 93.54, gaining more than 0.5%, before paring some gains.

Gold futures for December ended up $19.10 or about 1% at $1,985.90 an ounce. Gold futures ended lower on Thursday, snapping a nine-day winning streak.

For the week, gold future gained about 4.8%.

Silver futures for September moved up $0.854 to settle at $24.216 an ounce, while Copper futures for September settled at $2.8680 per pound, down $0.0460 from previous close.

In economic news, personal income in the U.S. slumped by more than expected in the month of June, according to a report released by the Commerce Department.

The report said personal income tumbled by 1.1% in June after plunging by a downwardly revised 4.4% in May. Economists had expected personal income to decrease by 0.5% compared to the 4.2% nosedive originally reported for the previous month.

Meanwhile, the report said personal spending surged up by 5.6% in June after skyrocketing by an upwardly revised 8.5% in May. Personal spending had been expected to jump by 5.5% compared to the 8.2% spike originally reported for the previous month.

Following twelve straight months of contraction, MNI Indicators released a report on Friday showing an unexpected expansion in Chicago-area business activity in the month of July. MNI Indicators said its Chicago business barometer spiked to 51.9 in July from 36.6 in June, with a reading above 50 indicating growth in regional business activity. Economists had expected the index to jump to 43.9.

With the much bigger than expected increase, the Chicago business barometer reached its highest level since May of 2019.

Consumer sentiment in the U.S. deteriorated by more than initially estimated in the month of July, according to a report released by the University of Michigan.

The report said the consumer sentiment index for July was downwardly revised to 72.5 from the preliminary reading of 73.2. The index is down from 78.1 in June and below economist estimates for a reading of 73.0.


The material has been provided by InstaForex Company - www.instaforex.com