Forex Market Review (Asian Session) – Dollar drops on news of FBI Director dismissal

Forex Market Review (Asian Session) – Dollar drops on news of FBI Director dismissal

The dollar was weaker during the Asian session after slipping on news that US President Donald Trump fired FBI Director James Comey. The yen was stronger due to geopolitical concerns and talk of another nuclear test by North Korea. Market jitters appeared to ease slightly as the European session opened.

Trump’s decision to dismiss Comey put investors on edge, causing the dollar to trim earlier gains when it had hit its highest level against the yen in almost two months at 114.32 in late US session trading yesterday. In Asia today, the dollar dropped to 113.62 yen before jumping back above 114 yen at the start of European trading.

In other news, China released inflation data during today’s Asian session, which showed factory prices slowed further as manufacturing cooled in the world’s second largest economy. Producer prices rose 6.4% year-on-year in April versus a 7.6% increase in March and slightly below the forecast of 6.9%. It was the eighth straight month of increase but the weakest since December 2016 as costs went up at a slower pace. Meanwhile, consumer prices rose 1.2% year-on-year in April following a 0.9% rise in March, slightly above expectations of a 1.1% gain. It was the highest inflation rate since January.

Looking ahead to the rest of the day, the markets will focus on ECB President Mario Draghi who will be speaking in the Dutch Parliament. The euro bounced slightly against the dollar in the Asian session but remained below the key $1.0900 level.

A US crude oil inventory report will also be closely watched later today. Data from the Energy Information Administration will be released. This report follows Tuesday’s report from the American Petroleum Institute, which showed crude supplies fell by nearly 6 million barrels last week. Oil prices reacted positively to the data, with WTI oil bouncing slightly to rise above $46 a barrel.

Source: Trade Forex with XM.

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