Summary:

• Fed chair Powell’s speech contains few surprises; USD remains supported
• Gold drops to lowest level since last July 
• Netflix plunges on drop in users 
• GBP drops despite solid labour market data
• Are commodity currencies set to recover?

One of the most highly anticipated events for the US dollar this week was Powell’s speech this afternoon. The speech contained no huge surprises with Powell being fairly steady and reiterating several remarks that have been heard before. The US dollar was trading higher on the day before Powell’s speech and the buck remains well supported with only a handful of currencies out performing the greenback on the day.

There’s been a potentially decisive break lower seen in Gold today with a better than expected US industrial production print seeing the market break below prior support at 1236. The precious metal has found some buyers stepping in around this level on a retest at the start of the month and a double bottom from the Dec 17 low looked like it was possibly forming. However, today’s break could be seen to negate this and should the move be further supported by a daily close below the level then a move to 1205 becomes more likely.       

Shares in Netflix have seen some strong selling today after the streaming giant delivered an underwhelming trading update. The main cause of disappointment lies in a fairly big miss in the number of users added with only 5.2m reported which is well below the 6.2m the firm itself projected back in April.

The level of employment in the UK economy reached its record high during the three months through May suggesting there could be still some slack left. Concurrently, wage pressure eased to some extent implying that the August rate hike could be just a ’one and done’ move as for this year. 

Commodity-related currencies have been among top losers against the US dollar since the start of this year. Their underperformance has come mainly from trade tensions between the United States and China, and as they are perceived as risk-on-correlated assets, they have been dumped by FX investors who have been allocating their capital to the US dollar. However, declines could have become overstretched given some indicators we are looking at in today’s more in-depth analysis.