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Daily Review 26.10.2016

US dollar stands firm as bets on Fed rate hikes grow large

The US dollar extended its gain against major currencies on Tuesday session, hitting a nearly eight-month high versus euro and roughly three-month high versus yen, as investors’ anticipation on Federal Reserve’s interest rate hike later this year grew bigger.

Expectations from the market on the possible rate increase this December jumped to 78 per cent yesterday from 74 per cent on Monday as recent comments from key Fed officials boosted the hopes.

The dollar index, gauging the greenback versus a basket of major currencies, continued to track the green zone as it rose 0.34 per cent and steadied at the 99.087 level, near the nine-month record high touched in the early Tuesday session at 99.119.

Against the euro, the greenback was last trading at 1.0851, the lowest level touched by euro since March 10, helped by the dovish remarks from ECB President Mario Draghi.

The US dollar also set a record-high against the Japanese yen as it advanced 0.08 per cent and settled at 104.26, the highest for the past three months.

It also stood firm against the British pound, up 0.18% at 1.2182 while against the Swiss franc it last closed at 0.9998.

Gold futures leap as demand kicks higher but Fed bets weigh

Gold futures finished in the green on Tuesday trading as physical demand for the commodity in India increased but rising hopes on interest rate hike by the Federal Reserve erased some gains.

The precious metal, which is highly sensitive to rising rates, erased its early gains as the growing expectations on rate hike boosted the dollar.

Spot gold finished 0.8 per cent higher and was last trading at $1 274.51 per ounce.

US gold futures for December was up $1 273.60 per ounce.

Other precious metals also gained ground as silver advanced 0.6 per cent and was last trading at $17.66. Platinum and palladium closed up 1.2 and 1.07 per cent respectively.

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