Market Drivers; US Session, July 8

The new trading week began with some respectable gains for the dollar, which shed some of its NFP-related weakness and gained some new momentum in reaction to the risk complex’s widespread knee-jerk. While this was going on, investors were processing the results of the French snap elections and progressively turned their focus to Powell’s semi-annual testimony and important US data.

Forex Space

Notwithstanding the decline in US rates, the USD Index (DXY) recovered the 105.00 barrier and higher. The main event on the US schedule for July 9 is Chair J. Powell’s semi-annual hearing before Congress. Barr and Bowman of the Fed are also scheduled to speak.

Shortly after reaching new four-week highs close to 1.0850, EUR/USD fell victim to the US Dollar’s late rally. On July 9, no data releases are planned for the Eurozone.

GBP/USD could not sustain the early move to multi-week tops near 1.2850, eventually ending the session almost unchanged. On July 9, the BRC Retail Sales Monitor is due along with speeches by the BoE’s Cleland and Truran.

USD/JPY alternated gains with losses around the 160.80 region following two daily drops in a row. The Japanese calendar will be empty on July 9.

AUD/USD came under pressure after reaching new six-month peaks in the 0.6760-0.6765 band. The Consumer Confidence gauge tracked by Westpac takes centre stage in Oz on July 9.

Commodities

A stronger US dollar and the expansion of peace negotiations in the Middle East caused WTI prices to sharply decline. Oil prices settled down about 1% to a one-week low on Monday as Hurricane Beryl shut U.S. refineries and ports along the Gulf of Mexico, and on hopes a possible ceasefire deal in Gaza could reduce worries about global crude supply disruptions.

Brent futures fell 79 cents, or 0.9%, to settle at $85.75 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 83 cents, or 1.0%, to settle at $82.33. Hurricane Beryl lashed Texas with strong winds and heavy rain as it churned inland. Oil ports closed, hundreds of flights were canceled and over 2.7 million homes and businesses lost power.

Due to the dollar’s recovery and some profit-taking, gold prices fell from their previous highs at $2,400 per troy ounce. Silver did the same, leaving behind some of the recent strong rebound.

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