The US Dollar (USD) experienced a significant rebound at the start of the trading week, following a wave of optimism sparked by positive US-China trade talks. This boosted the Dollar Index (DXY), which surged towards the key 102.00 level, marking its highest point in five weeks.
Market attention is now shifting towards upcoming economic releases, particularly the US Inflation Rate, as well as the NFIB Business Optimism Index and the API’s weekly report on US crude inventories. These reports are expected to have a significant impact on market sentiment, especially in light of the recent positive trade developments between the US and China.
In terms of currency pairs, the EUR/USD dropped sharply, reaching multi-week lows around 1.1060, as the US Dollar continued its rally. Focus will also be on the ZEW Economic Sentiment surveys for Germany and the Eurozone, which could offer further insight into the region’s economic outlook.
Meanwhile, GBP/USD has slipped to around 1.3140, driven by the US Dollar’s resurgence. The BRC Retail Sales Monitor and UK labor market figures will be important indicators for traders in the UK.
The USD/JPY also saw a sharp rise, hitting new six-week highs near 148.60, thanks to improved sentiment surrounding US-China trade relations. Market participants are now awaiting the Bank of Japan’s Summary of Opinions, which may provide more clarity on the BoJ’s outlook.
In the Australian Dollar (AUD), the pair broke below the 0.6400 support level, continuing its downward trend amid the stronger US Dollar. Traders will be looking out for economic data from Australia, including the Westpac Consumer Confidence survey, NAB Business Confidence, and building permits.
Crude oil prices also saw a boost, with WTI crude reaching three-week highs above $63.00 per barrel, driven by positive news surrounding the US-China trade talks. Gold prices, on the other hand, faced pressure, falling back to monthly lows near $3,200 per troy ounce, as the stronger US Dollar and rising US yields weighed on precious metals.
Overall, traders will continue to focus on the upcoming US inflation data, which is expected to be a key driver for market movements in the near term.
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