- USD strengthened significantly against rival currencies
- Precious metals under pressure on tapering fears
- US crude stocks rise unexpectedly
The US dollar continues a strong upward movement due to the expected change in monetary policy by the Fed in the near future. EURUSD fell to 1.1600 level during today's session, although at the beginning of this week the pair was trading above 1.1700. The dollar appreciated along with the strong rise in bond yields. The yield on the benchmark 10-year Treasury note rose above 1.54% in afternoon trading after dipping below 1.5% on Wednesday morning.
Yesterday, Powell spoke in Congress about excessive inflation (although he still pointed out that it was a temporary phenomenon), which he repeated today during a panel discussion at ECB Forum. Powell gave a clear signal that the economy is doing well, which offers an opportunity to start reducing the QE program.
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Create account Try a demo Download mobile app Download mobile appThe greenback was also unfazed, even as US Senate Republicans on Tuesday blocked a bid by President Joe Biden's Democrats to head off a potentially crippling U.S. credit default, with federal funding due to expire on Thursday and borrowing authority on around Oct. 18. After yesterday's strong sell-off on Wall Street, today we could observe a slight rebound, although technology companies are still doing very poorly.
Crude oil gained today, although an EIA report showed that crude oil stocks increased last week for the first time in two months. The price of WTI crude oil is hovering around $75.00 per barrel.
The dollar domination, boosted by increased expectations for a reduction in the US Federal Reserve's asset purchases by the end of the year, weighed on precious metals. Gold is already preparing for a possible drop below $1720.00 level. Of course, a lot will depend on whether bond yields will continue the current rally.
Silver fell sharply following FED Chair comments. Price broke below major support at $22.00 which is marked with lower limit of the 1:1 structure and previous price reactions. If current sentiment prevails, downward correction may accelerate towards next major support at $19.00. Source: xStation5
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