ICM: Dollar Soars on Powell’s Positive Remarks

ICM, the leading London-based FX and CFDs provider, reported that the greenback strengthened against peers post the positive remarks of the Federal Reserve Chairman Jerome Powell. On the other hand, the stock market gained support from the strong economic outlook and the absence of trade war developments.

Major U.S. indices closed higher with the Dow Jones rising for the fourth consecutive day and the Nasdaq posting a new record high. As per ICM trading platform, the Dow Jones rose 0.2% to settle at 25119, the SPX500 gained 0.4% to 2809, and the Tech-heavy Nasdaq added 0.6% to a record close of 7855. In the absence of trade spat headlines, the focus will be on the corporate earnings.

ICM highlighted that the dollar index which measures the greenback against a basket of major currencies rose to a three-week high ahead of the European trading session. The dollar strengthened on the positive remarks of the Federal Reserve Chairman Jerome Powell. Powell declared that the US economy grew at a solid pace, the wage growth was faster than a year ago, and the risks to the overall economy remain roughly balanced. Moreover, he confirmed that the Fed is going to continue with gradual rate hikes as long as the economic figures are encouraging. DXY rose from a bottom of 94.30 yesterday, to a high of 95.25. As per ICM trading platform, the USDJPY breached the 113 psychological level to trade at a six-month high of 113.10.

The Euro weakened against the United States dollar as the Fed’s chairman confirmed the divergence in the monetary policy stance between the FED and the ECB. As per ICM trading platform, the EURUSD fell from a high of $1.1744 to trade at a low of $1.1625 ahead of the European trading session. Consumer Price Index for June will be released today. A better than expected reading could provide support for the single currency, as the ECB said earlier that the interest rate move is data dependent.

The British pound fell to a three-week low against the United States dollar as the Brexit bill headlines weigh on the currency. As per ICM trading platform, GPBUSD tumbled from a high of $1.3269 to trade at a low of $1.3069. GBPUSD had its worst day since May 1st as the pair ended the day down 120pips. On the other hand, the average hourly earnings came out as expected at 2.5%. The Consumer Price Index for June is due today where a soft reading could add the pressure to the sterling.

Gold prices dropped to a fresh 2018 low during the Asian session as the Fed is said to continue with tightening its monetary policy. As per ICM trading station, the precious metal fell from a high of $1244 and traded at a low of $1222. On the other hand, the silver ounce traded at a one-year low of $15.44.

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Oil prices fell for the second consecutive day as the American Petroleum Institute reported a rise in the U.S. crude oil inventories. As per ICM trading platform, the West Texas Intermediate settled at a one-month low of $67.58, and the Brent oil settled at a three-month low of $71.60. The specter of oversupply is weighing on the oil prices especially that the U.S. could also use its strategic oil reserve to lower prices. On the other hand, the Energy Information Administration will report the official U.S. crude oil inventories later today.

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