US dollar index rally fades
The US dollar index (DXY) ended higher on Friday after the country’s Bureau of Labour Statistics (BLS) released better-than-expected job numbers. The data showed that U.S. employers added more than 1.8 million jobs in July while unemployment dropped to 10.2%. Despite the slight boost, the index remained in the red for the seventh consecutive week.
Today, the dollar index is under pressure as traders react to the stalemate in Washington about stimulus measures. Democrats blasted Donald Trump yesterday for signing an executive order that aims to boost the economy. That same day, Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin said that they were ready to restart talks in a bid to provide aid throughout the rest of this year. The dollar index will react to the JOLTs job openings data from the US that will come out at 14:00 GMT.
The chart below shows that the dollar index remains below the 50-day and 10-day EMAs. The index has also found strong support between 92.48 and 93.97.
US dollar index under pressure
DAX Index, FTSE 100 and CAC 40 futures in the green
European futures are in the green today. Those tied to the DAX index, CAC 40, and FTSE 100 are up by 0.47%, 0.63%, and 0.35%, respectively, ahead of multiple key earnings in Europe. Among the most notable firms that will release their results today are Glencore, Barrick Gold, Relx, Hembla and British Land, among others.
The indices are also gaining because of the rising trend of mega deals in the U.S. and Europe. A study by the Financial Times showed that eight deals with a value of more than $10 billion were announced in the last six weeks, most notably the $21 billion sale of Speedway Petrol Stations to Seven & I Holdings and a $20 billion deal by Analogue Devices to buy Maxim Integrated Products.
The chart below shows that the DAX index is in its second straight day in the green. The index is also above the 50-day and 100-day exponential moving averages.
DAX index is in its second day of straight gains
Gold and silver price in the green
Gold and silver prices are in the green today mostly because of the weaker US dollar. The metals are also rising ahead of key earnings from mining companies like Barrick Gold and Glencore. Silver price is up by 4% to $28.58 while gold price is up slightly to $2,035.
These metals have been in an upward trend in the past few weeks as traders react to the overall weaker dollar and the negative real yields in the US. The chart below shows that silver is attempting to recover its Friday losses.
Silver price forecast