The dollar rally that commenced in earnest just over two months ago seems to be gathering pace at the expense of many dollar denominated commodities such as gold and oil. Brent crude oil is a remarkable one as it has dipped back below the $100 level for the first time in over a year, down over thirteen percent in nearly three months as sellers continue to drive the price of crude lower in the face of building stocks and lower global growth prospects. Tomorrow’s weekly US crude inventories will be keenly watched to see how much more those stocks are building, whilst another eye will remain on the geopolitical situation in Ukraine which just seems to be quietening down.
The dollar index is not far off a four year high and most gains are coming from weakness in the euro and sterling. Both for obvious reasons with the euro suffering from the ramifications of yet another dose of loose monetary policy from the ECB last week and sterling fears mounting as we draw closer to the vote on Scottish Independence. Both EURUSD and GBPUSD are languishing near lows with EURUSD well below 1.3000 and GBPUSD not far too off the 1.6000 level.
Today focus will remain on sterling, not only from a geopolitical point of view, but a data one too as we see industrial and manufacturing figures released this morning. There’s also a speech by BOE Governor Mark Carney to the TUC Congress although he’s unlikely to give anything away in respect of monetary policy.