The U.S. Dollar (CURRENCY:USD) held gains against a basket of other global currencies this morning. However, these gains were limited as traders continue to book profits ahead of Federal Reserve Chair Janet Yellen’s comments on rate hike possibilities.
Rate hike clarity expected
Traders are anticipating the release of key economic data while Yellen is likely to provide more clarity on the timing of the next rate hike today. During Asian trade, USD/JPY traded marginally below at 109.67, down by 0.07%. EUR/USD (EURUSD) was rangebound at 1.1192 while GBP/USD (GBPUSD) fell 0.07% to 1.4661. U.S. Department of Labor reported a fall in a number of jobless claims by 10,000 to 268,000 during the week ending May 21.
Asian indices were higher even as oil prices eased down. However, the Shanghai SE Composite Index and Hang Seng Index (INDEXHANGSENG:HSI) closed lower at 2,814.03 and 20,371.36 respectively as investors remained on the sidelines over concerns about the state of the economy in China. The region’s profit growth at industrial firms declined in April, which signals a slowdown in the economic pace.
Unlike Asia, European equities were lower this morning as investors await the outcome of Yellen’s speech. Meanwhile, weakness in oil prices overnight kept traders cautious. Britain’s FTSE 100 (INDEXFTSE:UKX) dipped 0.08% to 6,260 while the French CAC 40 (INDEXEURO:PX1) plunged 0.28% to 4,500.03.
Oil rally disrupted
In commodities, oil prices slipped from seven month highs at the $50 a barrel mark as traders believed that higher prices could drive oil producers to rev-up their production, leading to a higher supply build up. Besides this, a stronger dollar also posed a threat to the buoyancy of oil prices. During early european hours, Brent Crude fell 0.73% to $49.23, and West Texas Intermediate slipped 0.67% to $49.15. A steep fall in U.S. crude stockpiles last week preceded by unplanned outages across oil exporting nations had helped the commodity to test its highest level in 2016.