Dollar recovers some of last week’s losses, Euro remained close to a six-month high, Oil above 51$Posted on Monday, May 22 2017 at 4:00 pm GMT+0000
Dollar recovers some of last week’s losses.
Last week, Trump faced political obstructions with White House lawyers’ attempt to figure out whether the president was found guilty of fleeting confidential information to the Russian commission.
The dollar dropped by more than 2%, and stock indices fell sharply despite good economic releases. We saw the biggest decline in stock indices since the beginning of the year, the DIA fell by more than 400 points and the NASDAQ index saw the largest decline since June, all that due to investors’ concerns regarding Comey’s testimony in the House of Senate and its consequences on the presidency and the markets.
But market’s recovery on Thursday and Friday is a sign that investors are more influenced by good fundamentals rather than pessimism. Trump’s growth agenda and tax reform plans and Saudi investments are providing some support to the greenback.
Euro remained close to a six-month high
The euro continues to trade near a six-month high regardless of the dollar’s recovery against major currencies today.
The broadly weaker dollar is helping underpin the single currency, while upbeat Eurozone economic data and abating political risk in the region are also providing added support.
Further positive releases could open the way for extended gains during the coming days, where the Euro could to test 1.13 and intensified tensions in the US that could push it even higher towards the 1.1450.
Oil above 51$
Oil prices hit a 4-week high above 51$ a barrel.
There are several motives behind that rise, aside from a broadly weaker dollar, the return of political tensions due to the new missile test conducted by North Korea, and most importantly optimism that producers will agree to extend the OPEC deal aiming to limit output, for six additional months.
These bets pushed oil higher and if there wasn’t any opposition from the participating countries the oil might target the level of $ 52.20. Hence any obstruction would restore the negative pressure.
Gold benefits from political tensions
The dollar’s recovery from a six-week low has pushed the in gold a bit lower.
Gold has benefited from the political tensions in the United States and threatened to return to worsen again at the end of the month, so with gold maintaining a bullish market structure above the 1245 level gains could be extended towards 1276-1295 in the medium term.