The weaker USD supports commodity prices

Wednesday, June 10, 2015

The USD index remains under pressure after falling for fourth consecutive session towards 94.50 against a basket of currencies. The main focus will turn to the US Federal Budget details this afternoon. The softer USD provides strong support to most commodity prices. Crude oil prices extended gains this morning with Brent front month futures climbing above $65 per barrel. Base metal prices edged higher in early trade and gold climbed over 0.6% to retest $1180/ounce.  

USD index 

DXY Curncy (DOLLAR INDEX SPOT)   2015-06-10 09-02-05

Asian equity markets extended losses overnight as the Hang Seng index dropped over 200 points (-0.75%) towards 26,750 and the Nikkei index fell 0.25% towards the key level of 20,000. This morning, European equity markets opened lower and remained under pressure as concerns regarding Greece’s economic stability continue to dominate the markets. However, the euro has slightly rebounded from yesterday’s losses and edged higher above 1.1350 against the USD.

France’s industrial production declined sharply 0.9% in April against analysts’ expectations of a 0.4% rise, while manufacturing production dropped significantly by 1% in April compared to a 0.3% rise in March. The disappointing economic data weighed on market sentiment and added further pressure to the CAC index which declined over 0.7% in early trade this morning.

Standard and Poor’s downgraded Barclays (from A to A-), RBS (from A- to BBB+) and Deutsche Bank (from A to BBB+) yesterday following concerns that state support has been now fairly “uncertain”.  However, ratings on Lloyds Banks, HSBC, Santander UK and Standard Chartered were affirmed.

 

Events for today:

0930

UK

Apr

Industrial & Mfg Production

1500

UK

May

NIESR GDP Estimate

1530

US

w/e

EIA Energy Stocks

1900

US

May

Fed Budget

 

All times UK Local Time

More from: Myrto Sokou