The Sterling Declines

The Greenback managed to hold its gains yesterday following Dudley comments. New York Fed President William Dudley stated on Monday that the U.S. inflation is a bit low, but should rebound alongside wages specially with labor market improving. Such comments could support expectations about the Fed's general plan to hike rates one more time before the year-end. 

  • The U.S. dollar index (DXY), which measures the greenback against a basket of currencies, settled at 97.62 pips yesterday, before declining to 97.40 pips.

Despite a strong USD, Gold prices managed to settle at $1,240. The yellow metal could be boosted by political uncertainty in the U.S. and by recent geopolitical tension between Russia and the U.S. after a U.S. fighter jet shot down a Syrian warplane. Technically, the yellow metal could re-test the support levels due to a strong USD.

The Sterling pound fell materially yesterday vs. USD and settled at the key support of $1.26, after Bank of England Gov. Mark Carney dashed hopes of an imminent rise in interest rates due to UK’s political uncertainty.

Oil prices declined as much as 2% posting a nine-month closing low, on signs of increasing production in many parts of the world, which could undermine the efforts by OPEC and other producers to support prices. U.S. crude settled below $43.50, in anticipation of the US oil inventory data.

The most important economic events:

  • GBP BOE's Haldane Speaks in Yorkshire: (GMT 11:00) – Low
  • NZD Reserve Bank of New Zealand Rate Decision (22 Jun): (GMT 21:00) – Important – Forecast (1.75%) – Previous (1.75%).

The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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