1. How Will US-China Trade Talks Affect The Forex Markets?
We are in fort two important events that are expected to have an impact on the USD pairs on Wednesday. The FOMC minutes, which will likely be a largely hawkish affair, and the much-anticipated trade talks between the US and China in Washington. The FOMC minutes are likely to reveal two more interest rate hikes for 2018 which is expected to provide some much needed support for the dollar. Meanwhile the US-China trade talks will be closely watched and any positive developments can push index markets higher. On the flipside if China and the U.S. leave the discussion table without plans for another meeting, high-beta currencies like EUR/USD are expected to retreat as the U.S. dollar will rally back to its former highs. Major indices like the S&P 500 are also expected to descend from their record breaking levels.*
2. Gold Prices Reach One-Week High
Gold prices hit a one-week high on Wednesday inching above the key $1,200 level as the dollar remained weak on U.S. President Donald Trump’s criticism of the Federal Reserve. Trump reiterated his displeasure with the Federal Reserve on Monday, commenting that rising interest rates have weighed on the dollar. Meanwhile, investors will be focusing on the release of the Fed’s minutes later on Wednesday and its annual economic symposium at Jackson Hole, Wyoming on Friday.**
3. Oil Prices Climb Higher On Inventories Decline
Oil prices rose on Wednesday, supported by a drop in U.S. crude inventories and a weaker dollar, along with concerns about a potential shortfall of Iranian oil from November due to U.S. sanctions. Brent crude oil futures (CL_BRENT) were at $73.01 per barrel at 7:00 GMT, up almost 40 cents, or 0.6 percent, from their last close. U.S. West Texas Intermediate (USOIL) crude futures were up 35 cents, or 0.5 percent, at $66.19 per barrel.***
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*Source: Investing, Aug 21, 2018 04:57 PM ET
**Source: Reuters, Aug 22, 2018 7:05 AM ET
***Source: Seeking Alpha Aug 16, 2018, 4:25 AM ET