November 26, 2024

Dollar index hardly lower after US data

LQDFX Forex news Blog: Dollar index hardly lower after US data

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The dollar index held hardly lower versus a basket of currencies on Wednesday.  A somewhat mixed report on domestic CPI reinforced the view that underlying U.S. inflation remains tame and the Fed would keep rates on hold.

As of 1244 GMT, an index that tracks the greenback versus six major currencies was 0.05% lower at 96.962. On Tuesday, the ICE dollar index fell to 96.858, the lowest level in eight trading sessions.

U.S. stocks opened slightly higher after a bout of selling on trade and growth concerns. Investors await minutes from the Federal Reserve’s latest meeting and the start of the corporate earnings season.

At the same time, the European Central Bank kept its ultra-easy monetary policy unchanged as expected on Wednesday. ECB gave recent stimulus measures time to work their way into the economy and counter spreading global gloom.

ECB President Mario Draghi confirmed that policymakers were considering measures to mitigate the impact on banks of its negative deposit rates as well as the pricing of new cheap two-year loans to banks, but said it was too early to decide. The ECB is all but certain to keep policy on hold, taking its time to evaluate whether its most recent stimulus is enough to arrest a rapid decline in sentiment.

The single currency was also hemmed in a tight range thanks to a bunch of currency options struck between 1.12 to 1.15 levels by traders in the eventuality of Britain crashing out of the EU without a deal.

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Forex – Dollar index hardly lower after US data

Against a basket of key rival currencies, the dollar was broadly flat at 96.95.

The euro was also hemmed in a tight range thanks to a bunch of currency options struck between 1.12 to 1.15 levels by traders in the eventuality of Britain crashing out of the EU without a deal.

That hedging in the currency markets was also evident in the sterling derivative markets, with deep out of the money puts, a form of insurance protection to protect against the likelihood of sterling crashing sharply, seeing some demand.

Oil prices rose on Wednesday back toward five-month highs hit the previous day, as OPEC production cuts and U.S. sanctions on Iran and Venezuela continued to tighten supply, though economic worries increased. International benchmark Brent futures were up 18 cents, or 0.25%, at $70.79 a barrel by 1220 GMT. U.S. West Texas Intermediate (WTI) crude oil futures were up 32 cents, or 0.5%, at $64.30.

PLEASE NOTE The information above is not investment advice.

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