USD Falls on Williams Comments
The US dollar posted declines on Thursday following comments from NY Fed President John Williams. Williams said that the central bank must act quickly to lower interest rates rather than wait for an economic disaster.
The NY Fed Chief was speaking at an event about how central banks should respond when interest rates are near zero. The comments come just a week before the Federal Reserve will be holding its monetary policy meeting.
Euro Looks to German PPI & Current Account
The euro currency traded flat on Thursday ahead of next week’s key ECB monetary policy meeting. Moving forward, the German PPI will be in focus. Producer prices in Germany are forecast to decline by 0.1% on the month. This comes after recent inflation data showed a rebound albeit still far away from the ECB inflation target rate. The current account data is also due later this morning.
EURUSD Likely to Close Flat
The currency pair is expected to remain in a holding pattern ahead of next week’s ECB meeting. From a technical perspective, price action remains firmly entrenched within the 1.1250 – 1.1188 levels. A breakout from this range could see further short term gains or declines. But this could also be limited in scope. Unless there is a strong fundamental catalyst, it is unlikely to expect further strength in the currency pair.
Crude Oil Continues its Descent
Oil prices continued to decline sharply on Thursday. The earlier gains in crude oil prices were erased as the commodity slipped to the lowest level in a month. Crude oil prices attempted to bounce higher earlier in the day. This came after news reports that Iran seized a foreign oil tanker. But the declines soon resumed in the back of the EIA’s inventory report on Wednesday.
WTI Crude Oil to Test Short Term Support
The current declines in crude oil prices are likely to push the commodity to establish the support area near the 54.42 level. This is a minor support area that will be tested. If the support fails to hold the declines, oil prices could be potentially aiming for the 51.70 level of support below.
Gold Stays Firm, Rises to a Fresh 6-Year High
The precious metal held steady on Thursday and is likely to post another week near the six-year highs. Gold prices gained despite some strong regional manufacturing data. The Philly Fed manufacturing index rebounded in July from a 4-month low. The data gave renewed optimism that the US economy could remain on the growth track.
XAUUSD Consolidating into an Ascending Triangle Pattern
The precious metal is consolidating into the ascending triangle pattern. Price action is testing the resistance level of 1431 – 1428 region. A breakout above this level confirms further upside in gold. However, unless there is a strong breakout higher, it is unlikely that the breakout can be sustained.