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The dollar continued its ascent from the earlier trading session as geopolitical risks remained in play. Crude oil also took advantage of this phenomenon to test the $70 per barrel level during the session.

  • U.S. consumer credit slumped from $13.6B to $11.6B vs. $16.2B forecast
  • FOMC member Barkin: U.S. economy still on a strong trajectory
  • Barkin: Consumer and business confidence support growth
  • Barkin: Inflation is essentially hitting the 2% target
  • FOMC member Bostic: Fed expected wages to rise faster this year
  • Bostic: Comfortable with inflation overshooting target to some degree
  • Trump to announce decision on Iran nuclear deal

Major Events/Reports:

 Mostly upbeat Fedspeak

A couple of FOMC voting members took to the podium to share their thoughts on U.S. economic developments and policy biases..

For FOMC member Barkin, the U.S. economy is still on a good growth trajectory as consumer and business confidence support the expansion. He also added that fiscal stimulus has been supportive of growth.

Furthermore, Barkin remarked that inflation is essentially hitting the central bank’s 2% target but that tightness in the economy could keep upside pressures in place. He did warn, however, that trade jitters could dampen business activity and that companies lack pricing power.

FOMC Bostic focused more on the lack of wage growth, citing that policymakers had expected a faster pace of gains given how tight the U.S. labor market already is. Then again, he also acknowledged that if current trends continue, wages could see more upside as the jobs market hits scarcity. Bostic also pointed out that he is comfortable with inflation overshooting the 2% target to some degree.

A bit of caution from ECB’s Praet

ECB policymaker Praet also shared some of his thoughts on the euro zone economy and future policy moves, admitting that recent data has shown a bit of moderation.

He outlined three criteria for ECB officials to keep on keepin’ on with their pace of tapering and eventually expiring asset purchases: convergence, confidence and resilience.

Although he still noted that an ample degree of stimulus remains unnecessary, he put the spotlight on the CPI miss due to a decline in services inflation.

Crude oil ticks higher on Iran jitters

U.S. President Trump is slated to make his decision on whether or not to dump the Iran deal, reviving speculations of a dip in oil output in the region. Crude oil reached the $70 per barrel level for the first time since 2014 before retreating back to $69.94 per barrel.

Recall that the Donald has repeatedly threatened to withdraw from the agreement and his posse doesn’t seem to have a clue if efforts by European allies have been enough to convince Trump to stick with the deal.

Some diplomats shared that they expect the U.S. to opt out of the agreement created with Britain, China, France, Germany, and Russia. This could lead to economic sanctions being reinstated and geopolitical concerns staying on.

Major Market Mover(s):

USD

The dollar continued to power through for the rest of the day, supported by safe-haven demand and a few positive remarks from FOMC members.

EUR/USD retreated from 1.1928 to a low of 1.1897, USD/JPY advanced to 109.14, USD/CHF is up to 1.0020, and AUD/USD fell to a low of .7493.

Watch Out For:

  • 1:30 am GMT: Australian retail sales (0.2% expected, 0.6% previous)
  • Tentative: Chinese trade balance (187B CNY expected, -30B CNY previous)
  • 3:00 am GMT: New Zealand quarterly inflation expectations (2.1% previous)