- Wall Street closes mixed after roller-coaster ride
- Oil prices tumble following rise in US production
- ECB’s Nowotny calls the US a currency manipulator
By Michael O’Neill
NY Focus: US dollar bulls were strutting their stuff at the start of the session and continued to do so until the day ended.
News of the latest German government coalition undermined EURUSD as the Finance portfolio was given to Social Democrat, whom many believe will increase support for indebted Eurozone economies.
EURUSD selling accelerated when ECB Council member Ewald Nowotny accused the US government of deliberately weakening the US dollar. EURUSD dived from 1.2338 at the open to 1.2261 at the close.
The price of US crude dropped overnight to $61.27/barrel due to oversupply. Photo: Shutterstock
Sterling traded erratically in a 1.3850-1.3935 range and closed unchanged for the day, supported by the pending Bank of England meeting.
USDJPY rallied in concert with the broad dollar strength and supported by the rise in US Treasury yields.
The commodity currency bloc traded steadily but lower throughout the day. NZDUSD weakness accelerated at the end of the day when the RBNZ left rates unchanged and delivered a somewhat dovish policy statement.
Oil prices plunged on news that US crude production rose to 10.25 million barrels per day while crude inventories increased as well. WTI oil dropped from $63.86 to $61.27/barrel.
Thursday Focus: Sterling may overshadow EURUSD moves on Thursday. The Bank of England interest rate decision, policy statement and Quarterly Inflation Report are due.
The BoE is expected to provide a hawkish shift in rhetoric and upgraded 2018 GDP forecast. If the BoE disappoints, and EURUSD remains under pressure, GBPUSD may break support in the 1.3830-40 area and drop towards 1.3600.
A move above the 1.3980-00 area would lead back to 1.4200.
GBPUSD four-hour chart
Source: Saxo Bank
-- Edited by Adam Courtenay
Michael O'Neill is an FX consultant, currency strategist and author of the Trade of the Day at Loonieviews.net. Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.