In an uneventful trading during the Asian session due to the absence of any economic data releases, the dollar edged up. The dollar index, which measures the greenback’s value against a basket of six major currencies inched up 0.12% to last trade at 93.21. Oil prices rose amid indications that supply is tightening.
Looking at reactions in the forex market, the dollar strengthened against most majors. Euro/dollar fell just below the $1.18 mark to last trade at $1.1795. The pound weakened and was trading at $1.2872 ahead of the European open. The greenback strengthened against the yen with the pair trading at 109.29 yen, erasing all of its yesterday’s losses. This signals that geopolitical anxiety has temporarily eased and market participants are now fully focused on the events in the second part of the week.
European Central Bank President Mario Draghi is due to speak on Wednesday in Germany and will join Federal Reserve Chair Janet Yellen in the Fed’s conference starting on Thursday. While many news reports have warned the markets that the two central bankers will likely not reveal anything new about their respective monetary policy outlooks, traders will still be focused on their speeches for any potential clues.
In a relatively quiet trading week, some of the key data releases that are expected later in the day include the German ZEW economic sentiment index, CBI industrial orders for the UK and monthly core retail sales in Canada. The Vice-President of ECB’s Vitor Constancio is due to speak at 12:00 GMT.
Economists are expecting the German ZEW economic sentiment index to show a slowdown in Germany’s economy. The index gauges the six-month economic outlook and its August forecasts stand at 15, down from 17.5 recorded in July. Current conditions also look to have cooled down as the estimates predict a reading of 85.5, below the prior’s months reading of 86.4. Any surprise to the upside could be supportive for the euro.
Oil prices gained during Asian trading on signs that supply is tightening, especially in the US. These indications will be put to test in the late US session when the American Petroleum Institute publishes statistics on crude inventories and refinery operations for the week of August 14. Should the report show a fall in inventories, oil prices could find support for a further boost. WTI was last trading at $47.64 a barrel and Brent was at $51.96.
Gold weakened during today’s first session of the day to last trade at $1,285.26 an ounce.