ICM: Dollar dips on Hopes for U.S/China trade talks

ICM, the leading London-based FX and CFDs provider, reported that the greenback tumbled on Wednesday following the news that the United States is seeking a new round of trade talks with China.

The dollar index which measures the greenback against a basket of major currencies ended lower for the third consecutive day. Three main factors affected the dollar since the beginning of the week. First, the possible Brexit deal between Britain and the European Union which boosted European currencies against the dollar. Second, the optimism from the trade talks between the United States and Canada. Third, the news that the United States is seeking a new round of trade talks with China. The three events improved investors risk sentiment which was negative for the dollar. DXY logged its lowest close in two weeks of 94.81. The index held steady during the Asian session as market participants await key data such as the Consumer Price Index of August, Bank of England meeting, and the European Central Bank meeting.  A better-than-expected CPI reading will affirm the next rate hike by the Federal Reserve.

The British pound is hovering near a six-week high against the United States dollar, supported by the hopes of a Brexit deal. The pound strengthened as Brexit-supporting lawmakers in May’s party publicly pledged support for her. On the other hand, the Bank of England interest rate decision is due today where analysts expect the monetary policy to remain on hold. The Average earnings index picked up slightly in August which will support the tightening plan of the bank. The bank is likely to re-address the risks of a “no-deal” Brexit. As per ICM trading platform, the GBPUSD is trading at $1.3040, and the GBPJPY is trading at 145.40.

The Euro rose to a three-day high against the dollar as the European Commission President Jean-Claude Juncker asked for a bigger global role for the single currency. The European Central Bank meeting is due today where the bank is likely to keep the policy unchanged. A press conference by President Mario Draghi will follow the decision. Investors will focus on the macroeconomic projections and search for hints on whether the ECB could raise rates before summer 2019. As per ICM trading platform, the EURUSD is trading at $1.1620, and the EURGBP is trading near 0.8900.

Metals prices rose as the dollar selling round continued. As per ICM trading platform, the gold ounce traded at a two-week high of $1208, and the silver ounce appreciated to a high of $14.28.

Oil prices continued higher, supported by the drop in U.S. crude inventories and the looming U.S. sanctions on Iran. The Energy Information Administration reported that the U.S. crude oil inventories fell by 5.296 million barrels to a total of 396.2 million barrels, the lowest since February 2015. As per ICM trading platform, the West Texas Intermediate crude futures traded at a one-week high of $71.24 per barrel, and the Brent futures traded above $80 for the first time since May.

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