The Chicago Federal Reserve said on Monday its gauge of U.S. economic activity strengthened in April to its highest level since late 2014, suggesting an acceleration in production and hiring activity following an anemic first quarter.
At the start of this week, the U.S. dollar initially rose against currencies that had performed well last week as traders banked some profit. However, the gains could not last long, especially against the euro. The EUR/USD surged past 1.12 handle to a new yearly high.
Get on the OPEC/non-OPEC bandwagon! All other OPEC members are on board for the extension of production cuts leading to speculation that even a bigger cut might be in the works. Saudi Arabia’s energy minister, Khalid A. Al-Falih, said all producers have agreed to extend cuts for another nine months until global supply is back to the five-year average.
The U.S. dollar is lower across the board and has given all the 2017 gains to end up near pre-elections levels. The turmoil in Washington continues to be the main driving factor for markets with the potential testimony of former FBI Director James Comey on Wednesday the biggest event risk for the greenback. The U.S. Federal Reserve has sent mixed signals via non-voting members on the path of rate hikes but the market still holds a 78.5 probability of higher rates when the U.S. central bank meets in June.
The price of gold fell yesterday as risk sentiment improved following sharp falls in the equity markets the day before. The dollar bounced back thanks to better-than-expected readings in the Philly Fed Manufacturing Index and weekly U.S. unemployment claims while a mini flash crash in the British pound/U.S. dollar currency pair also helped to underpin the Dollar Index, which in turn increased the pressure on gold.