Market Drivers – US Session – Wednesday August 17

Mohamed Abdelhamid 18 August, 2022 2:25 am Forex Market, Market Update

The US dollar finished Wednesday higher against most major rival currencies on Wednesday, despite suffering a near-term retreat following the release of the FOMC Minutes.

The US dollar posted modest advances against safe-haven currencies, with USD/CHF trading around 0.9510 and USD/JPY at 135.00.

Gold trades at $1,762.70 per ounce at the time of writing, extending its weekly slide, while crude oil prices spent the day consolidating losses. WTI is changing hands at $87.50 a barrel.

Economic Data

Prior to Wall Street’s opening bell, Retail Sales in the US stayed virtually unchanged at $682.8 billion in July, the data published by the US Census Bureau showed on Wednesday.

This reading followed June’s increase of 0.8% and came in slightly weaker than the market expectation of +0.1%. “Total sales for the May 2022 through July 2022 period were up 9.2% from the same period a year ago,” the publication further read. “The May 2022 to June 2022 percent change was revised from up 1.0% to up 0.8%.”

On the other hand, the EIA said that it expects the global oil demand to rise by 2.1 million barrels per day in 2023 to surpass the pre-Covid levels at 101.8 million bps. “Demand growth is expected to slow from 5.1 mln bpd in 1Q22 to just 40,000 bpd by 4Q22,” adds EIA. The report also mentioned that the world oil supply hit a post-pandemic high of 100.5 million bpd in July.

Other Developments

FOMC minutes showed that US policymakers unanimously agreed to hike rates by 75 bps, seeing a slowing pace of hikes at some point. It also read that many Fed officials saw the hazard the Fed could tighten more than necessary. Furthermore, some participants said the policy rate would have to reach a “sufficiently restrictive” level to control inflation and remain there “for some time.”

The EUR/USD pair managed to post modest intraday gains and settled around 1.0180, although the local GDP was downwardly revised. The GBP/USD pair, on the other hand, remained under pressure and finished the day at around 1.2050.

Commodity-linked currencies were among the weakest, with AUD/USD now trading around 0.9630 and USD/CAD just above 1.2900. The NZD/USD is down to 0.6270, as the New Zealand dollar retained its strength despite RBNZ Governor Orr saying they did not consider a 75 bps rate hike and lifted the main rate by 50 bps.

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