Market‌ Update: Dollar Strength, Oil Price ⁢Rise, and Economic Data

The‌ US dollar experienced significant gains this ​week, poised for its largest weekly increase in two months.⁢ This surge followed positive ⁤economic data released on Thursday, ⁢including​ stronger-than-expected figures for US economic growth, ⁣unemployment claims, durable goods​ orders, and wholesale inventories. The‍ dollar index (USD), which tracks the greenbackS performance against a‌ basket of six currencies,⁣ reflected this strength.

Market sensitivity,initially concerned about bilateral trade agreements reached wiht the Trump administration,has been tempered as these ⁤agreements ⁤haven’t proven as ‌disruptive as initially‍ anticipated.

Focus is⁢ now ⁤shifting to upcoming US economic data, ⁢specifically‌ the release of consumer‍ spending ‌figures and inflation data measured by the Personal consumer Expenses Price Index (PCE)⁤ later on Friday. Investors are seeking further clues regarding the ⁢potential need for additional interest​ rate ‍cuts by the Federal Reserve. A Reuters poll predicts the PCE will show a 0.3% month-over-month increase and a ‌2.7% year-over-year‌ increase for August.

According to the CME Fedwatch tool, the ⁤probability of the federal Reserve‍ holding rates steady next ⁢month has risen to 14.5%, up⁣ from 8.1% ‍the ⁢previous day. ⁢ Expectations for total⁤ rate cuts⁤ by the end‌ of the year have also decreased, falling below 40 basis points.

The Department of Commerce reported a revised Gross⁢ domestic Product (GDP) increase of 3.8% for the​ period between April and June, exceeding the initially ‌reported 3.3%. This upward revision surpassed economists’ expectations.

oil Market

oil prices are also on the rise,tracking towards⁣ a weekly ​increase​ of over⁤ 4%.⁣ This⁢ increase is largely attributed⁢ to disruptions in Russian energy infrastructure,leading Moscow to halt fuel exports.

Brent crude futures (LCOc1)​ were trading at $69.55 a ⁤barrel, up $0.13 (0.2%), while West Texas Intermediate (WTI) crude (CLc1) reached $65.14 a ⁣barrel, a ⁣gain of⁤ $0.16 (0.3%).

PVM ​analyst ‌Tamas⁢ varga noted that‍ the escalating geopolitical risk premium, fueled by intensified Ukrainian drone attacks, ‍has materialized into a⁣ genuine ‍supply shortage, notably impacting Europe’s distillate deficit. Both Brent and WTI are on track for their largest weekly⁣ gains as mid-June.

Russia‍ announced a partial ban ⁤on diesel exports until​ the end of the year,‌ expanding its existing ban on ‌gasoline exports. This decision follows a⁤ decline in refining‍ capacity,‌ which has led to fuel shortages in several Russian regions.

NATO’s warning regarding potential ⁤responses to further airspace violations has heightened ⁢tensions related to the war ⁣in Ukraine and raised the⁢ possibility of additional sanctions targeting the ‌Russian oil​ industry, according to ANZ ‌analyst daniel Hynes.

Positively, oil flow from‌ the iraqi ‍Kurdistan region ​to Turkey is expected to ⁢resume on Saturday, as confirmed by two officials from the Iraqi Ministry of Petroleum.

However,the strong​ US GDP⁤ growth of 3.8% annualized ⁢in the ‌last quarter is expected to partially limit oil price gains.

Dollar Weakens as Markets Anticipate Potential Fed ⁢Rate Cuts

The Colombian ‌peso strengthened⁤ against the dollar yesterday, closing at $3,898.04 – an ‌$8.2‍ decrease ​compared to the official⁣ exchange rate (TRM) of $3,906.24. Throughout the day, the dollar traded between a low of $3,881 ⁣and a high of $3,914.50, with a total of 1,400 transactions amounting to US$982 million. This represents the lowest closing ‍value since June 1st,2024,when the dollar closed at ⁣$3,860.92.

This movement is linked to global trends, ‍as the dollar experienced a broad decline on​ Monday amid expectations that the Federal Reserve may begin lowering interest rates at its upcoming meeting. Former President donald Trump publicly urged Federal Reserve Chairman Jerome Powell to implement a “major” rate cut, citing concerns about the real estate market.

Market analysts predict a 25 basis point reduction in interest rates at the Federal Open Market Committee⁤ meeting scheduled for​ September 16th and 17th, with a roughly 5% probability of a more ample⁤ 50 basis point cut,‌ according to the CME Fedwatch tool.

“What we see is simply a lack of generalized conviction, with operators relatively content⁣ to remain on the‌ sidelines until the outcome of the FOMC ⁢meeting on Wednesday is known,” noted Michael​ Brown, a market analyst at Pepperstone in London.He added⁤ that trading positions are likely to remain stable in the short term, possibly increasing activity after the FedS proclamation.

The DXY dollar index, which tracks the dollar’s strength ​against a basket of six major currencies, fell 0.4% to a near one-week low‍ of 97.273. The dollar also weakened against the Japanese ​Yen, dropping 0.2% to 147.335 ⁤yen, while ⁤the ​euro gained 0.3% to US$1.1771.

Despite recent stabilization, many ‍currency market participants believe the dollar remains ​on a downward trend.Investors will be closely‌ scrutinizing the Fed’s economic projections and Chairman Powell’s commentary to assess the potential​ scale and timing of future​ interest rate adjustments.

Goldman Sachs analysts​ anticipate the Fed’s statement will‍ acknowledge a softening labor market, but do not foresee a shift in monetary policy or an indication of a rate cut in October.

Beyond ⁣the US, investors are​ also monitoring interest rate decisions from central banks in Japan, the United Kingdom, Canada, and Norway this‌ week. The Bank of england and the Bank of Japan are⁣ widely expected to hold rates steady. Focus is ​especially on the Bank of England’s plans regarding⁢ the ⁤pace of ⁤reducing its government bond⁢ holdings, and on ‍signals from the Bank of Japan that coudl indicate a ⁢potential rate hike‌ later this year.