Euro Drops on Soft Data/ Easing Prospects


The euro settled on a weaker note against the dollar for the fifth consecutive day on easing prospects as the economic outlook continues to weaken. Recently, several ECB officials were hinting for monetary policy easing measures in the coming meetings as the economic data missed estimates signaling that the economy needs a fresh round of stimulus to get back on track. The July Consumer Price Index figures failed to surprise to the upside with the month-on-month change dropping by 0.5%, the first drop since January. Market participants are looking forward to the release of the preliminary August PMIs where strong figures could refresh their hopes. The EURUSD declined to a low of $1.1073, and the EURAUD tumbled to 1.6309.


The dollar index which measures the greenback against a basket of major currencies climbed to a three-week high of 98.40 as US Treasury yields recovered further. The US 10-year yields rebounded to 1.626% after testing a three-year low of 1.474% on Thursday. Moreover, investors are favoring the dollar to rivals such as the euro, and pound. The deteriorating economic outlook in the Eurozone is worrying investors and could force the European Central Bank to take aggressive easing measures. Also, the Brexit Saga continued to weigh on the British pound.


Gold prices dipped further as the dollar edged higher along with US treasury yields. Investors were seen shifting into riskier assets and dumping safe-haven assets. The price of a gold ounce tumbled to a one-week low of $1493, the price of a silver ounce drifted lower to $16.83, and palladium soared to a three-week high of $1485 on rising demand from car manufacturers.


Oil prices extended rally on improved investors' risk appetite. The expectations of aggressive easing by top central banks around the world helped to ease investors’ concerns over the global economic outlook. The West Texas Intermediate crude futures rose to a one-week high of $56.44, and Brent futures advanced to $60.02.

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