ICM Capital, the leading FX and CFDs provider, reported that the fears of a trade war between China and the United States faded slightly and the markets cooled down. The focus for currency traders is shifting from the development of the trade tensions to the Swiss National Bank and Bank of England Interest rate decision today. Moreover, OPEC meeting is taking place tomorrow in Vienna where top oil producers will discuss the future output plan.
The Swiss National Bank and the Bank of England are expected to remain on hold and highlight the risks arising from the trade tension and the slowdown in the global economy. No major changes in the fundamentals of the Swiss economy occurred lately. On the other hand, the economic reports from the United Kingdom failed to show that the economy is regaining pace in the second quarter after the slowdown that took place in the first quarter.
ICM highlighted that the greenback remains strong near an eleven-month high supported by the rise in the US treasury yields. The US 10-year treasury yields ended a four-day losing streak yesterday and bounced to 2.95%, the highest level in a week. The dollar index, DXY, which measures the strength of the US dollar against a basket of major currencies reached a fresh 2018 high of 95.32. The Canadian Dollar is the worst performer against the United States dollar, where the USD/CAD reached the highest level since June 2017 of 1.3325. EUR/USD and GBP/USD were drifting lower after being caught in a tight trading range since last week. The Kiwi tumbled to the lowest levels in almost seven months against the US dollar post the GDP figures. The GDP QoQ and YoY came out as expected but slightly lower than the previous reading.
Gold prices fell during the Asian session to post a new 2018 low of $1262/ounce. The rise in the US Treasury yields weighed on the precious metal as investors prefer the risk-off yielding bonds to the non-yielding bullion. The silver ounce reached a low of $16.18, down more than six percent in a week.
Oil prices were mixed yesterday as the Brent oil dropped for the second day whereas the West Texas Intermediate ended the day on slight gains. The spread between the Brent and the WTI narrowed to less than $9 after widening to more than $11 in the past weeks. On the other hand, the Energy information administration reported that the US crude oil inventories fell by 5.914 million barrels last week. However, oil prices will remain dependent on the outcome of the OPEC meeting tomorrow.