U.S. Dollar rises to multi-week highs, oil prices hit records
The U.S. Dollar is trading in mostly favorable ranges as the Buck returns to playing a safe-haven role amid losses across equity exchanges globally.
At the time of writing, Nasdaq futures declined by over 1.5% following statements from various artificial intelligence companies about a need to slow down the development as security risks are closely assessed.
Additionally, investors are highly concerned about the never-ending surge in oil prices as Middle East tensions intensify further. Saudi Arabia decided to shut down its East-West pipeline as a precaution following attacks on infrastructure and advance by Houthi forces backed by Iran. With the situation presenting a two-punch combo for markets, the greenback’s fortunes are due to a flight to safety.
This week will be an eventful one packed with central bank decision-making with the Fed’s meeting and presser on Wednesday being the biggest risk event. Additionally, the Bank of England will gather on Thursday while a much-awaited interest rate hike is likely to be announced as the Bank of Japan speaks on Friday. On the domestic data front, we will not have anything until tomorrow’s ADP Employment Change for the week of August 29th, Retail Sales out Wednesday, Housing numbers on Thursday, and closing with Industrial Production on Friday. We shall see if any breaking news changes the current positive momentum for USD value, the highest overall in two weeks.
What to Watch This Week…
- Fed Meeting and Presser on Wednesday 2PM
- Bank of Japan Decision on Friday
- USA Online is always open
The complete Economic Calendar can be found here.
EUR
The Euro dropped to its weakest value against the Buck since August 13th, primarily as a result of worries about ever-growing energy prices as well as losses for European equity exchanges. European Central Bank Executive Board member Isabel Schnabel said oil costs have been “quite concerning” further explaining that “refining capacities have reduced drastically and can’t be rebuilt quickly.” At a conference amongst other economists, the conclusion was that there is low storage across Europe and there is competition from Asia for liquefied natural gas supplies. Although the ECB hiked its benchmark interest rate last week by 25 basis points, the shared currency has not found merit in relatively underwhelming economic indicators lately.
MXN
The Mexican Peso has fallen to its weakest value against USD since August 10th as the financial environment shifts its focus to the troubles of armed conflict and slower tech ambitions as guardrails are expected. In terms of economic indicators, Mexico has experienced better Manufacturing and Industrial Production, however, central bank officials, Banxico, are more watchful of inflation, which while still advancing some, it slowed down for all regions. Banxico will meet on September 24th, so a “dovish” or “hawkish” tone will matter tremendously as they likely decide to keep interest rates at 6.5%.