US dollar unchanged as minutes reveal an upbeat FOMC
Global stocks declined as the market continued to worry about trade. In the United States, the Dow and S&P500 declined by 112 and 11 points respectively. In Asia, Nikkei and Shanghai declined by 246 and 3 points respectively. The markets have been worried about the potential of a landmark trade deal between the United States and China. This is partly because no tangible progress has been made six weeks after the two countries announced a truce. Reports show that the US has rejected China’s proposal of lowering tariffs while China has rejected US requests for commitments to buy large farm products.
The dollar index was unchanged in overnight trading after the market received FOMC meetings for the previous meeting. The minutes showed that Fed officials’ worry about the slowing economy had started to ease. Members were more upbeat about the economy than they were in a previous meeting. They also continued to express their fears about uncertainties associated with trade. The members voted 8 to 2 to slash rates and there was a consensus about staying in the side lines. The reason the dollar was unchanged as it always does after minutes are released is that the market had already priced-in the pause of interest rates hikes.
The price of crude oil dropped even after the better-than-expected inventories data. Data from EIA showed that crude oil inventories came in at more than 1.379 million. This was lower than last week’s 2.219 million barrels. It was also lower than the median Reuters forecast of 1.543 million. Weekly distillates declined by 974k while gasoline inventories rose by 1.75 million barrels. The decline of crude oil prices is likely a result of demand and supply fears. Demand could be affected if the trade war drags on while supply could be affected if OPEC members do nothing in the upcoming meeting.
The EUR/USD pair rose slightly in the Asian session. The pair moved from yesterday’s low of 1.1053 to a high of 1.1077, which is slightly lower than the 50% Fibonacci Retracement level. The pair is slightly above the 14-day and 28-day moving averages. It is also along the important resistance level where the pair was throughout the week. The two lines of the Relative Vigor Index have been moving upwards. This signals that the pair may see a significant breakout in either direction. This could happen when the market receives Philadelphia Fed PMI data.
The XBR/USD pair rose sharply after the EIA released its inventories data for the previous week. The pair rose from a low of 59.55 to a high of 62.00. The pair dropped slightly during the Asian session to a low of 61.21. The price is between the middle and upper line of the Bollinger Bands while the 20-day standard deviation has been rising. The signal and main line of the MACD have moved up slightly. The pair may continue declining if the truce between the US and China blows up.
The USD/CHF pair rose from a low of 0.9890 to a high of 0.9905 in the Asian session. This rise came after a sharp decline that happened yesterday when the pair declined from a high of 0.9936. The pair is trading along the 14-day and 28-day moving averages. The RSI has moved from a high of 70 to the current 46 while the average true range has been moving upwards. The pair may remain within the current range today.