US Session Recap: Commodities Take A Significant Hit

Global financial markets saw a significant shift as the US Dollar (USD) staged a solid comeback, enjoying its third consecutive daily rise. This recovery was fueled by a notable reduction in anxiety surrounding international trade disputes and concerns about US credit risk. The Dollar’s strength was apparent, even as returns on US government bonds pulled back slightly. The week ahead will be relatively quiet on the US economic data front, with only reports on mortgage applications and crude oil stockpiles due for release.

Forex Moves and Key Events

The strengthening Dollar put pressure on its major rivals. The Euro (EUR) extended its correction, falling to its lowest level in several days. Traders will be listening closely for comments from officials at the European Central Bank (ECB) for further guidance. Meanwhile, the British Pound (GBP) was squarely on the defensive, sinking below a key support level to hit multi-day lows. The main event dominating the UK’s financial landscape is the highly anticipated UK Inflation Rate data, which could heavily influence the Bank of England’s future policy moves. An official from the Bank is also scheduled to speak.

In Asia, the Japanese Yen (JPY) weakened, pushing the US Dollar to a six-day peak against it. This movement was largely attributed to ongoing political issues in Japan. The country’s trade balance figures will be the sole economic release to watch. The Australian Dollar (AUD) saw volatile trade, reversing a recent rally and retreating below a key level. Attention in Australia will turn to the release of manufacturing and services business surveys, alongside a speech by a Reserve Bank of Australia (RBA) official later in the week.

Commodities Take a Hit

The firming US Dollar and the easing of global trade worries took a heavy toll on precious metals. Gold, which had recently reached all-time highs, entered a deep correction phase, retreating significantly from its peak. Silver saw an even more dramatic drop, collapsing by more than 8% to hit a two-week low. Simultaneously, oil prices continued their downward slide for a fourth straight day, approaching a notable lower price mark as persistent concerns over global oversupply weighed on market sentiment.