The U.S. dollar remained relatively unchanged on Monday, staying close to its multi-week lows. Traders seemed hesitant to make significant moves as they eagerly anticipated the outcome of the Federal Reserve’s upcoming policy-setting meeting later in the week.
Last week, the dollar experienced a decline of approximately 0.5% due to a surge in the number of Americans filing new claims for unemployment benefits. This increase in jobless claims suggested that the Federal Reserve might pause its cycle of raising interest rates. Consequently, the dollar faced a decline across the board, highlighting the market’s response to economic data releases.
The market focus now shifts to Tuesday’s release of U.S. consumer prices, as it could potentially impact sentiment if inflation remains high.
Oil Prices Decrease Amid Uncertainty Surrounding Fed Meeting – On Monday, oil prices declined ahead of the Federal Reserve meeting as investors sought to assess the central bank’s position on further interest rate hikes. Concerns regarding China’s fuel demand growth and the increasing supply of Russian crude also had a dampening effect on the market.
Brent crude futures dropped by 70 cents, equivalent to 0.94%, settling at $74.09 per barrel, while U.S. West Texas Intermediate (WTI) crude stood at $69.53, down by 0.91%.
Both benchmarks experienced a second consecutive weekly decline due to disappointing economic data from China, which raised concerns about demand growth in the largest crude importer globally. These declines offset the price increase resulting from Saudi Arabia’s commitment to reducing production by 1 million barrels per day in July.
This week will witness meetings of major central banks, including the Federal Reserve, the European Central Bank, and the Bank of Japan.
Crucial factors that will influence market direction include the U.S. inflation reading scheduled for Tuesday, which will provide insights into the overall economic climate. Furthermore, experts suggest that the policy outlook of the Federal Reserve for the year ahead will play a pivotal role in guiding the trajectory of oil prices.
Colmex Pro Ltd is licensed and regulated by the Cyprus Securities and Exchange Commission (CySEC), under license number 123/10. Trading financial instruments and/or using leverage carries a high level of risk and may not be suitable for all investors. The figures refer to the past, and past performance is not a reliable indicator of future results.