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U.S. Dollar Down Slightly on Lackluster Trade Ahead of Fed Decision

The U.S. Dollar traded both sides of the previous close against a basket of currencies on Monday before settling lower. The trade could best be described as lackluster with low volume and low volatility highlighted. Most of the major players were on the sidelines awaiting Wednesday’s U.S. Federal Reserve interest rate and monetary policy decisions.

March U.S. Dollar Index futures settled at 93.470, down 0.019 or -0.02%.

U.S. Dollar Index
Daily March U.S. Dollar Index

The Euro, which tends to have the biggest influence on the U.S. Dollar Index settled unchanged in a slow trade. The New Zealand Dollar was a big mover, posting a 1.05% gain versus the U.S. Dollar. The currency surged on Monday after NZ Superannuation Fund Chief Adrian Orr was named as next governor of the Reserve Bank. Investors believe that his strong ties to the business community could lead to strong growth and possibly a more hawkish tone than his predecessor.

U.S. Economic Reports

On Monday, the Bureau of Labor Statistics announced that the number of job openings was stagnant in the month of October. The results of the October Job Openings and Labor Turnover Survey (JOLTS) showed the number of job openings was “little changed” at 6 million on the last business day of October, while hires increased to 5.6 million, according to the Labor Department.

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In auction news, the Treasury Department auctioned $24 billion in 3-year notes at a high yield of 1.932 percent. The bid-to-cover ratio, an indicator of demand, was 3.15, Indirect bidders, which include major central banks, were awarded 59 percent. Direct bidders, which includes domestic money managers, bought 7.4 percent.

The Treasury Department also auctioned $20 billion in 10-year notes at a high yield of 2.384 percent. The bid-to-cover ratio, an indicator of demand, was 2.37. Indirect bidders, which include major central banks, were awarded 57.2 percent. Direct bidders, which includes domestic money managers, bought 8.4 percent.

Comex Gold
Daily February Comex Gold

Gold

Gold prices held firm early in the session on reports of an explosion in New York City and in reaction to technically oversold markets, however, sellers eventually retook control, driving prices to their lowest level since July 15. Buyers were also scarce because of expectations of another Fed rate hike on Wednesday. Rising interest rates tend to underpin the U.S. Dollar, making it a more desirable asset. This leads to a drop in demand from foreign investors for the dollar-denominated asset.

Brent Crude
Daily February Brent Crude

Crude Oil

U.S West Texas Intermediate and international benchmark Brent crude oil rallied on Monday with the latter leading the price surge. Brent crude spiked to its highest level in 2 ½ years on Monday on news that a major pipeline in the U.K.’s North Sea will shut down for repairs.

According to reports, the Forties pipeline system will close for several weeks while its operator, INEOS, repairs a crack in a pipe discovered last week. The pipeline is responsible for about 450,000 barrels a day of Forties crude from offshore fields in the North Sea to a processing plant in Scotland.

E-mini Dow Jones Industrial Average
Daily March E-mini Dow Jones Industrial Average

U.S. Equity Markets

The major U.S. stock indexes posted strong gains on Monday, reversing a lower opening that was fueled by a terror incident near New York City’s Times Square.

Equity investors shook off news of an explosion of a low tech device during rush hour Monday morning at New York’s Port Authority, sending the Dow Jones Industrial Average to an all-time closing high. The S&P 500 Index also rose, supported by strong performances in the technology and energy sectors.

This article was originally posted on FX Empire

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