Yahoo Finance Market Snapshot – Dollar in a Quandary
Dollar Confused
The dollar continues to trade in a tight consolidation mode during the course of the day so far as the dollar traders are confused whether they should consider the risk surrounding the dollar or whether they should consider the rates. The next rate hike from the Fed is on the horizon and it is generally expected that the Fed would be hiking rates during March. Under normal circumstances, this would have led the dollar higher and encouraged more buying of the dollar but that has been tied down due to the increase in risk associated with the dollar. The US administration has imposed tariffs on the steel and aluminium exports and this has led to increased risk as there is fear and uncertainty that this could lead to a full fledged trade war between the major economic powers of the world. This has placed pressure on the dollar as well and that is why we are seeing the dollar in consolidation mode rather than being buoyant.
Gold Buoyant
The gold prices have been able to continue their recovery on the back of weakness in the dollar which has been seen all across the markets. This has been utilised well by the gold bulls in saving the gold prices from falling below the 1300 region and the prices have since bounced strongly from that region. But looking ahead, the gold prices continue to trade in a large range and it has been quite some time since the prices have been able to push through either side of the range over the last few weeks. We expect the consolidation to continue with the gold prices under pressure in the short and medium term. This is likely to happen due to the anticipation in the markets over the impending rate hikes in the coming days.
This article was originally posted on FX Empire
