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August 3, 2016

US Dollar extends declines as growth on Wall Street stalls, Aussie gains prove RBA impact was limited

US Dollar extends declines as growth on Wall Street stalls, Aussie gains prove RBA impact was limited

US Dollar tumbled to a six-week low against the basket of majors on Wednesday as markets continue see earthly chances of the FED raising rates this year. A downturn of the US currency extended after many of the Wall Street bulls withdrew from trading: local stocks demonstrated worst performance in this month because of lackluster economic data and falling oil prices.

US public spending rose, though investors were rather focused on weak inflation figures. Together with drop in business investments and weak GDP growth in the second quarter FED could give up an idea of rate hikes in this year.

Greenback futures hit the session low of 95.201, near a minimum of six weeks at 95.003 recorded at night. European common currency trades without sharp swings near 1.12 after rising 0.6% during the Asian session to $ 1.1233 – the highest since June referendum, where UK decided to break from the European Union. USD/JPY rose 0.32% to 101.20. The pair dropped 1.5% to three week low of  100.680 as the meeting of Minister of Finance Taro Aso and BoJ governor Haruhiko Kuroda spoiled expectations the policymakers will announce new plan to weaken the Yen. Comdolls advance on buck weakness, with AUD/USD soaring 1% during Asian trading. The pair hit a three-week peak of $ 0.7638, erasing declines despite RBA decision to lower cash rate by 25 b.p. to 1.5%

Oil traded near a 3.5-month lows, as global markets lapsed into risk-aversion mode. Oil prices failed to recover on API data which indicated crude inventories declined in the US as the pace of production outpaces the destocking. According to the API, crude oil inventories fell  by 1.34 million barrels to 518.7 million in the week ended July 29 matching forecasts. Inventories at the Cushing storage Hub in Oklahoma fell by 1.30 million barrels, API data showed.

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