US dollar falters ahead of important Fed decision
The US dollar declined today as traders awaited the Federal Reserve interest rate decision and the Federal budget balance. The dollar index, which tracks the performance of the greenback against a basket of currencies, declined by 0.30%. Analysts expect the bank to leave interest rates unchanged, accelerate its quantitative easing program, and potentially start a yield curve control mechanism. Also, they expect it to use a cautious tone, especially after the US created more jobs than expected in March. Meanwhile, the dollar reacted to May’s consumer price index data. The numbers showed that the headline CPI declined by 0.1% in May and increased by 0.1% on an annualized basis. The core CPI, which excludes the volatile food and energy products, declined by 0.1% in May.
The Australian dollar rose today even after China released weak inflation and new loan data. The numbers showed that consumer prices declined by 0.8% in May after declining by 0.9% in the previous month. The prices rose by 2.4% on an annualized basis. Meanwhile, factory gate prices declined by a record 3.7% in May after falling by 3.1% in the previous month. These numbers mean that the Chinese economy is not doing as well as most analysts were expecting. Other data from the PBOC showed that new loans issued in May were worth 1.48 trillion yuan, down from 1.7 trillion yuan in the previous month. Australia is keeping a close watch on the data because of the significant volume of trade it does with China.
The price of crude oil declined today as the market reacted to the rising oil inventories from the United States. Data by the American Petroleum Institute (API) showed that inventories jumped by more than 8.4 million barrels in the previous week. This was a significant increase from the previous week’s contraction of 500,000 barrels. Later today, the EIA will release the official data. Analysts expect the numbers to show that inventories declined by more than 1.78 million barrels after dropping by 2 million barrels a week ago.
The EUR/USD pair continued to rally as traders waited for the Fed interest rate decision. The pair is trading at 1.1385, which is the highest it has been since March. Also, it is trading above the 50-day and 100-day exponential moving averages. Meanwhile, the RSI has moved above the overbought level of 70 while the Average True Range (ATR) has been subdued. The pair may continue rising as bulls attempt to move above 1.1400.
The GBP/USD pair rose to a high of 1.2790 even after OECD warned about the vulnerability of the UK economy. On the four-hour chart, the pair is trading at the highest it has been since March 12. The Triple Exponential Average (TRIX) has remained above the neutral line, which means that the price may continue to rally as bulls attempt to test the important resistance at 1.3000.
The price of crude oil declined today as the market paid attention to US inventories. The XBR/USD pair is trading at 40.62, which is slightly above the ascending trend line shown in white below. The price is also above the short and medium-term moving averages on the four-hour chart. The signal line and histogram of the MACD are also declining. Still, the XBR/USD pair is also moving in an upward trend, which means that the price is likely to continue rising.