The US Dollar’s early gains faded, ending with little change from the previous day. Trade tensions rose again due to new tariffs imposed by the US on Japan and South Korea. On Wednesday, the US Dollar Index reached multi-day highs near 98.00, helped by rising US yields. Now, all eyes are on the FOMC Minutes, as well as the MBA Mortgage Applications and the EIA’s crude oil inventory report.

Euro And Pound Movements

The EUR/USD stabilized above 1.1700, with upcoming speeches from ECB’s Lane and De Guindos. The GBP/USD fluctuated, hitting two-week lows before bouncing back around 1.3600, with the BoE’s Financial Stability Report being crucial. USD/JPY rose to multi-week highs near 147.00; Japan is closely watching Machine Tool Orders. The RBA’s hawkish stance helped AUD/USD surpass 0.6500, with important data releases and speeches from RBA officials expected. WTI crude prices climbed to monthly highs near $69.00, driven by strong demand and decreased US production. Gold continued to drop around $3,300 per ounce, affected by trade news, a strong dollar, and rising yields. Silver also fell, staying below $37.00 per ounce. After an initial surge, the US Dollar lost momentum, finishing the session nearly unchanged. The earlier strength—backed by higher yields—began to wane. New trade tensions emerged with fresh tariffs from the US aimed at Japan and South Korea. These events are part of a broader shift towards protectionism, which can affect global risk sentiment. Although the Dollar Index peaked close to 98.00, it struggled to go higher, showing that markets may be cautious ahead of upcoming policy updates. Now, attention turns to the Federal Reserve. The release of the minutes from their last meeting will shed light on their thoughts. Are more rate hikes likely, or has the outlook changed? In any case, short-term rate expectations are under scrutiny. Additionally, new mortgage data and domestic crude inventory figures will reveal how rising borrowing costs and energy trends are impacting the economy.

Market Impacts On Commodities

The euro remained steady, holding just above 1.1700. Upcoming speeches by Lane and De Guindos will be significant; their tone may indicate whether Frankfurt will maintain its current policy or consider further tightening. Recent euro weakness seems more influenced by external events than by eurozone data. In contrast, the pound faced some pressure, briefly hitting two-week lows before recovering. The pound’s near-term direction may depend on the Bank of England’s latest risk assessment. Depending on how systemic threats are viewed, rate expectations could change. Bailey’s challenge remains managing high inflation while ensuring financial stability. The USD/JPY pair continues to rise, nearing 147.00. This strength is partly due to differing policy outlooks, but there’s also concern about domestic activity in Japan. Machine Tool Orders, often overlooked, can provide critical insights into industrial momentum that could influence policy decisions in Tokyo. The Australian dollar was boosted by a more assertive tone from policymakers. The RBA’s recent comments pointed towards tighter policy, pushing the AUD above 0.6500. Upcoming speeches and additional data will help traders gauge whether market expectations are overly optimistic or cautious. Oil prices continued to rise, hitting one-month highs, thanks to strong demand and limited supply. Improving summer travel trends and refinery activity have also supported prices. US domestic production has declined slightly, adding further support to crude prices. Gold prices fell further, approaching the $3,300 mark. It is under pressure from a strong dollar, rising yields, and renewed trade tensions that raise growth concerns without increasing demand for safe-haven assets. Silver also struggled, remaining below $37.00 amid competition from interest-bearing investments. For those trading derivatives, caution is advised. Monitor interest rate differences and stay alert for central bank policy hints. As implied volatility rises, it’s smart to reassess delta and gamma exposure. These moments reward precision. Understanding how macro factors relate to short-term contracts can provide insight into momentum shifts, especially when short-term carry costs rise. This week, price movements have become more reactive to data, rather than following set patterns. Create your live VT Markets account and start trading now.

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