Speech by the US Fed Chair is expected today

The US dollar index is growing today for the third day in a row. The main reason for this is the Fed’s view that further quantitative easing is unlikely to provide significant additional support to the American economy. In particular, this was stated by Charles Evans – the head of the Federal Reserve Bank of Chicago. He also added that the Fed could raise the rate (0.25%) without waiting for inflation to grow to 2%. Recall that in August, consumer price growth in the United States reached 1.3% on an annualized basis, and this is the maximum since January this year (before the coronavirus pandemic). The next Fed meeting, however, will not be soon – November 5. Now the dollar was additionally supported by excellent data on the secondary real estate market for August. Existing home sales reached the maximum of 14 years and amounted to 6 million. The third factor behind the strengthening of the US dollar index was the increase in the number of new coronavirus cases in France, Spain, Great Britain, and other European countries. This increases global risks and boosts the attractiveness of the greenback. Markit Manufacturing PMI Flash (preliminary forecast is positive) report will be released in the US today, and Fed Chairman Jerome Powell will deliver a speech.

On Tuesday, US stocks rose for the first time after 4 days of continuous decline. In addition to positive data on the American secondary housing market, this was facilitated by rumors that the new American economy aid package could amount to $1.5 trillion, and not $500 billion as the Republicans had previously proposed. The S&P 500 advance was led by Twitter (+ 7.1%) and Amazon.com (+ 5.7%) stocks. US stock index futures continue to rise this morning in anticipation of positive Markit Manufacturing PMI data for September. Investors also expect Fed Chairman Jerome Powell to reaffirm his commitment to current monetary policy and maintain the current QE volume until at least the next Fed meeting in November.

World oil prices remain almost unchanged for the second day in a row. They are supported by another storm in the Gulf of Mexico, which disrupted the functioning of a part of the oil refinery and terminals. According to the independent American Petroleum Institute, US oil stocks rose by 691,000 barrels over the week. Official information on reserve changes will be released tonight. It can affect the dynamics of oil prices. The Libyan National Oil Company announced that Libya will increase its oil production by 250 thousand barrels per day starting from next week.

Precious metals quotes fell today amid the strengthening US dollar. This is how investors reacted to the positive US macroeconomic data and the outlook for the future Fed rate hike. The gold prices are supported by global risks associated with an increase in the number of coronavirus cases in Europe, as well as plans to assist the American economy in the amount of $1.5 trillion, not $500 billion. Recall that when the $3 trillion aid package was discussed, gold quotations were approaching $2080 an ounce.