USD Lost Some Forex Strength During the Trump – Putin Summit
Published on: 07/17/18 3:35 PM
On the day that United States President Donald Trump met with his Russian counterpart, the dollar was not able to hold on to the strength it has exhibited for most of the year.
Initially, Trump and Russian President Vladimir Putin spent more than two hours behind closed doors in Helsinki as forex traders kept an eye on the major markets; by the time the two leaders came out for a press conference, the greenback had retreated towards the 94.20 level on the DXY even as traders were hoping to see the currency climb towards 95 on Monday.
The euro was slightly bearish during the summit press conference, which mostly featured on Trump downplaying the Special Counsel investigation on the alleged collusion between members of his political campaign and Kremlin operatives. EUR/USD moved slightly back towards the 1.1686 – 1.1737 level; however, this is bound to change after key fundamental events continue to take place in July.
The DXY dollar index could resume its climb towards 95 this week after the Chairman of the Federal Open Markets Committee appears before the Senate Finance Committee on Tuesday on the following day, he will answer questions from U.S. House Representatives of the Financial Services Committee.
Since there were no major economic bombshells revealed during the U.S. – Russia summit, the financial markets were mostly sideways and subdued; the only significant headline came from the commodities markets, where the price of crude oil touched below the $70 level all the way down to $68.42. The lower price was a bit surprising at a time when OPEC has been trying to manipulate production towards the $100 price level; however, U.S. economists and financial regulators have other plans in mind as they have been issuing waivers to ease current sanctions on Iran. Even this development failed to boost the greenback, and one currency pair that was certainly impacted was USD/CAD, which took a hit of more than 30 pips on Monday, thereby making it attractive for some traders hoping to cash in on a potential upswing this week.
The most significant forex action for the rest of July will come from Wall Street. The setbacks suffered by the stock market earlier this year when Trump fired the first shot of the global trade war have been erased by bullish investors. Wall Street traders are happy to keep the party going, and this was reflected by the Dow Jones Industrial Average sailing past the 25,000 points mark in the hours after the American/Russian summit.
There are valid reasons to believe that the DXY will not able to sustain levels higher than 95 this year, but Wall Street traders seem to be shrugging off political scandals unless they are of the earth-shattering kind. As long as Wall Street remains bullish, forex traders can count on USD staying strong.