ICM, the leading London-based FX and CFDs provider, reported that the US stock market remains under pressure as tech shares weigh on major indices. On the other hand, the US dollar tumbled for the second consecutive day ahead of crucial economic data.
Major US indices fell as tech stocks continue to sink since late last week. The drop started when Facebook reported weaker-than-expected revenue and lowered its revenue growth forecast as the company is said to spend more money on security and privacy. As per ICM trading platform, the Dow Jones Industrial Average fell 0.5% to settle at 25306, and SPX500 lost 0.6% to close at 2802. The Tech-Heavy Nasdaq Composite posted its biggest three-day decline since March as the index lost 3.86% in the last three days. The Index traded at a three-and-a-half week low and ended the session at 7630. US stocks could remain under pressure as investors weigh the growth concerns and the effects of trade tariffs on the profitability of major US companies.
ICM highlighted that the dollar index which measures the strength of the greenback against a basket of major currencies drifted lower for the second consecutive day. DXY traded at a low of 94.26 and closed at 94.35. The dollar index is trading in a tight range between 94.11 and 94.90 since the comments of President Donald Trump on the strong dollar and the interest rate hikes by the Federal Reserve. Investors are afraid that Trump’s comments might affect the interest rate path of the Federal Reserve and drive the dollar lower.
The Euro rose against the United States dollar ahead of the preliminary release of the July Consumer Price Index and the second quarter GDP. The European Central Bank left monetary policy unchanged last week. However, a pickup in wage growth and inflation numbers could lead the ECB to raise interest rates earlier than expected. As per ICM trading platform, the EURUSD is trading above $1.17 level and approaching the upper bound of the consolidation zone.
The Bank of Japan concluded its two-day meeting where the bank changed its long-term yield target. Governor Kuroda stated that there is no need for additional easing at the moment and interest rates will remain low for an extended period of time. Moreover, he is confident that inflation will reach the two percent target as the factors that delayed the increase in inflation will vanish. The bank will also allow the bond yields to fluctuate in a wider range, but this doesn’t mean that they intend to raise interest rates. As per ICM trading platform, the USDJPY is almost flat on the day and trading near the 111 level.
Gold and silver prices ended almost flat on Monday due to the absence of major fundamental news to drive the metals. As per ICM trading platform, the gold ounce settled at $1221, and the silver ounce ended at $15.46. Market participants are looking ahead to FOMC meeting tomorrow which could enhance some volatility.
Oil prices rallied higher where the West Texas Intermediate traded above $70 per barrel for the first time in a week. Oil prices found support from the rising tensions in the Middle East, the heavy crude outage in Canada, and the drop in crude inventories in the United States. However, oil prices could settle as President Trump stated that he is ready to meet President Rouhani with no preconditions. On the other hand, the American Petroleum Institute will report the US week crude oil stock today.