25/06/2024 - 08:00 UTCA moderate decline was observed in the dollar on Monday, with the dollar index (USDX) ending the session 0.37% lower as the focus for this week turns towards politics and more specifically the first U.S. presidential debate between President Joe Biden and his predecessor Donald Trump. Another key event for this week, that could play its part in setting the direction for the dollar, is Friday's release of the U.S. personal consumption expenditures (PCE) price index, which the Federal Reserve relies on to gauge progress in getting inflation down to its 2% target.
As far as monetary policy is concerned, market expectations shown by the CME FedWatch Tool, heavily favor a rate cut by the Fed in September (61.1%) with November also a strong possibility (50.3%).
In other news, the yellow metal has been hovering around the $2,300 an ounce level over the past week, as traders look for more clues regarding the prospect of the first rate cut taking place later this year. Even though inflation numbers for May were encouraging, strong PMI data for June sparked concerns that strength in the U.S. economy will keep rates high for longer.
Wall Street painted a mixed picture on Monday, as both the US 500 and the US tech 100 are seen retreating from recently reached all-time highs, reeling from steep losses in NVIDIA Corporation, while the US 30 is seen moving higher. Nvidia stock lost around 6.7% of its value on Monday, tumbling for a third straight session after it briefly became the top company in the US in terms of market capitalization. Even with the recent decline, Nvidia's stock remains up an impressive 138% for the year, with analysts remaining bullish on the company, citing the booming AI market as a key driver.
Economic data takes center stage today with a series of key housing, consumer confidence and manufacturing data due from the US while the main focus lies on GDP and Core PCE Price Index data due later this week.
EUR/USD drifted up in a mild recovery from last Friday’s dip starting the new week with daily gains of 0.42%.
German sentiment surveys broadly missed expectations early Monday, but Euro markets are flaunting downside EU figures to follow the broader market higher as risk appetite continues to pin to hopes of at least a quarter-point cut from the Federal Open Market Committee’s (FOMC) September 18 rate call.
Key economic data releases are relegated to later in the week. An update to US Gross Domestic Product (GDP) figures is slated for Thursday, with Friday rounding out the trading week with German Retail Sales and the latest update for US Personal Consumption Expenditure (PCE) Price Index inflation.
Tuesday’s economic calendar is notably restrained, with an appearance expected from German central bank President Joachim Nagel. Moreover, Federal Reserve (Fed) officials are expected to give several speeches.
Gold prices rose on Monday, helped by a pullback in the dollar, while market participants looked forward to U.S. inflation data due later this week that could influence the Federal Reserve's monetary policy path.
The focus this week will be on the U.S. Personal Consumption Expenditures (PCE) data, the Fed's preferred measure of inflation, due on Friday.
Also on the radar are at least five Fed officials, including San Francisco Fed President Mary Daly and Fed Governors Lisa Cook and Michelle Bowman, who are scheduled to speak this week.
Traders are currently pricing in a 66% chance of a Fed rate cut in September, according to the CME FedWatch Tool.
Oil prices rose more than 1% on Monday, spurred by the prospect of strong summer driving demand and as tensions in the Middle East and drone attacks on Russian refineries led to concerns about supply.
Geopolitical risks in the Middle East and an increase in Ukrainian drone attacks on Russian refineries also underpinned oil prices.
Furthermore, an easing U.S. currency made dollar-denominated commodities such as oil more attractive to buyers using other currencies.
After last week's big decline in U.S. crude and gasoline inventories, market participants are waiting to see whether the report due on Wednesday will provide further evidence of sustained strong gasoline demand.
The US 30 rallied on Monday to a one-month high, while the US Tech 100 and US 500 retreated as market participants rotated out of AI-linked stocks and added some laggards to their portfolios, betting on Federal Reserve interest rate cuts this year.
Nvidia slid 6.68% for a third session, as market watchers cited profit taking in the semiconductor bellwether after last week's meteoric rise made it the world's most valuable company.
Other data this week include durable goods, weekly jobless claims and final first-quarter GDP figures, and some quarterly earnings reports also. On Thursday, President Joe Biden will debate Republican rival Donald Trump in Atlanta.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.
Join iFOREX to get an education package and start taking advantage of market opportunities.
A beginner's e-book
$5,000 practice demo account
A 12-part video course
English (India) 
Arabic - العربيه
Chinese Simplified - 中文 (简体)
Chinese Traditional - 中文 (繁體)
English
Japanese - 日本語
Kazakh - Қазақ
Korean - 한국어 (대한민국)
Russian - Русский
Spanish - Español
Thai - ไทย
By