Originally published by Rivkin Securities
The US Dollar Index continued its slide overnight, falling below 90 for the first time in three years. It has now been in a downtrend for the past year despite the interest rate hikes that have occurred during this time. One of the knock-on effects of this was that gold climbed above $1,350 overnight to finish the session at $1,358 per ounce. This is right at a three and a half year high and represents a continuation of the uptrend that started after the last Federal Reserve rate hike in December last year. The major US stock markets closed close to flat although the Nasdaq 100 was down 0.6%.
US bond yields inched up again overnight after falling slightly the prior day. Yields are again pushing towards new multi-year highs with the 10-year yield now at 2.65%.
The Australian dollar has climbed to US$0.807 on the back of the weaker US dollar which represents a two and a half year high. The strength of the Aussie dollar will start to concern the Reserve Bank of Australia as it believes these levels will have a dampening effect on the economy. The upside for consumers is that overseas purchases are becoming cheaper.
Oil prices jumped overnight as inventories continue to decline. WTI oil is now at US$65.88 per barrel while Brent is at US$70.72. These prices represent new almost three-year highs and represent gains of over 50% (for WTI) from the lows of mid-2017. Higher oil prices will eventually be reflected in higher consumer prices as the costs of transport of most goods will rise with rising oil prices.
Data Releases:
- Euro Zone Interest Rate Decision 11:45pm AEDT