USD Index reaches 7 month highs, but will FOMC reverse things?

Today’s highlight is the FOMC Minutes from the September 21st FED meeting. The Minutes will give further insights as to the stance of the FED members towards raising rates in December and will reveal under how much pressure Janet Yellen is. So far the chances for a late year hike are 75%, and the more they increase, the more the USD benefits. The USD has also benefited as Democratic presidential nominee Hillary Clinton widened her lead in opinion polls over Republican rival Donald Trump. Yesterday the markets were relatively calm for most of the day, with the USD rallying towards the end of the European Session.

Currencies: The Dollar Index has made new highs yesterday across the board reaching new 7 month highs. More notably, GBPUSD was the weakest currency once again, with the old lady dropping to 1.2088 from 1.2350 highs, before trading at 1.2266 at time of writing. The Pounds rebound is attributed to reports that Theresa May has accepted that Parliament should be allowed to vote on her Brexit Plan. EURUSD posted also a 2-month low by reaching 1.1030 lows from 1.1130 yesterday. Elsewhere, the USDJPY’s rally was halted yesterday on the back of softer stock prices. Commodity currencies rallied with AUDUSD rising from 0.7535 to 0.7590, while NZDUSD rose from 0.7050 to 0.7095.

Stocks: Shares in Asia are mixed today, with Shanghai down and Nikkei up a mere 0.25%. Overnight, U.S. stocks were lower after the close on Tuesday, as losses in the Healthcare, Basic Materials and Utilities sectors led shares lower. European shares have opened flat, after being sold off from their highs yesterday afternoon. Today’s FOMC Minutes will set a new direction so caution is advised.

Oil and Gold: Gold Prices fell on Tuesday as a stronger Dollar amid expectations of a rate hike are putting pressure on the precious metal. Gold dropped to $1252 from $1261 highs. Just 7 trading sessions ago, Gold was trading over $1310, a price swing that shows how directly the correlation is against the USD. Oil prices have risen once again, setting roots over the $50 mark, as Russia expressed its willingness to cut production. The prices have fallen since then though as Igor Sechin, the head of Russia’s state-own energy company Rosneft and Russia’s largest oil producer, is against the proposal.

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