US Dollar Extends Gains

The US Dollar is extending its rally ahead of the high-impact USD data set to be released today. GDP figures for Q1 will be coming in at 12:30 GMT, and the annualized quarterly GDP is expected to remain steady at 2.2%. Economic growth within the US has been strong for 2018, and traders are expecting to see another two more rate hikes from the Feds this year, and a positive reading for key figures will certainly help keep the Fed on track.

The EUR/USD pair extended its retracement slide from levels beyond the 1.1700 handle, touched on Tuesday, and fell to its lowest in 4-day. The pair broke below the 1.1600 figure and now trading at 1.1556. Concerns over political complications in Germany are expected to be a drag on the single currency, as German Chancellor Angela Merkel’s fragile coalition government faces potential collapse. The Christian Social Union (CSU), her Bavarian ally, has threatened to defy her and impose border controls unless their demands to reduce Germany’s immigration burden are met.

The EU Summit is starting today and will be continuing into the close of the week, the EU will release the European Commission confidence indexes and finally Germany will offer preliminary June inflation, seen slightly below May’s readings.

The USD/JPY is in focus as trade war angst continues to dominate the headlines, driving investors to the side-lines at times of negatively, favouring the yen, or driving the yen lower on any signs of potential relief in the tit for tat spat between the United States and major trade partners, such as China and the EU.

The Sterling is settling into the year’s lows as trade concerns and a Brexit-heavy FSR did little to encourage bulls back into the fold. Thursday’s thin calendar for the GBP will see US GDP figures taking front-and-centre in determining market direction heading into the late week.

Oil rose to a 3.5-year high of $73.05 yesterday – the highest since November 2015 as the oil bulls are back in charge since the US called on their allies to adhere to a zero tolerance on Iran imports. Oil production was flat at 10.9 million barrels per day last week, according to the Energy Information Administration’s Weekly Crude Oil Stockpiles Data.

Gold prices slip, hovering near a six-month low as investors continue to pile into the haven US dollar to buy US bonds, trying to digest the latest developments in the U.S.-China trade row.