June has been an inspirational month for dollar longs. Building on the back of two consecutive months of gains, the greenback was in a rampant mood at the half way mark of the month.
Last week’s double dose of increasing inflation data (the US's year-on-year consumer price index came in at 2.8 per cent versus the 2.7 expected and 2.5 per cent previous) and a hawkish Federal Open Market Committee spurred the Dollar Index to the 95 handle. While the increase in US rates to the revised 1.75 to 2 per cent band was priced in, it was the upgrades to future US economic projections and a largely optimistic tone that rallied dollar bulls.
The Fed noted that the economy was growing at a “solid” rate, an upgrade to the “moderate” rating adopted in May’s meeting. There were upgrades to the expected unemployment rate (from a median rate of 3.8 per cent forecast in March to the revised 3.6 per cent in June) and overall GDP is expected to grow to 2.8 per cent versus a march forecast of 2.7 per cent. Perhaps most notably, the release all but cemented the need for two additional rate hikes through the rest of 2018.
While the dollar tested 95 levels in the aftermath of the announcement, long positions ran out of steam as the Index finds itself currently consolidating in the mid 94 range. We would need to see a daily closing above that 95 level to conclude that the dollar is due up for another leg higher towards 97 through the summer months. Levels of 93.60 would need to hold through the weeks ahead to maintain this bullish bias in the greenback.
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Read more:
While the US dollar shone in May, it is now taking a breather
US dollar takes centre stage in the financial universe
US dollar strengthens as geopolitical risks ease
Optimism returns to the markets but volatility is far from over
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Despite the bullish mood in US financial markets, US equities remained rather unenthused. While our 2675 downside target is yet to materialise – the upside resistance stills holds true at 2800 as shared in my last publication. We saw 10-year treasury yields spike above 3 per cent following the Fed announcement, and as long as there is consolidation below these levels, gains in US equity markets will remain in check.
The dollar move has taken its toll on the euro, which found itself in the middle of a selling spree following the European Central Bank rate decision last Thursday. While Mario Draghi and the ECB kept rates unchanged, the president signalled an end to their massive 2 trillion euro, three-year asset purchase plan this December. However it was his dovish stance towards future interest rates – a pledge to not raise rates for another 12 months that spooked forex markets, which had until that point priced in a more than 30 per cent chance of an ECB rate hike within a year.
The dovish sentiment rallied European bourses, but sparked a large downside move in the euro, which slid more than 1.88 per cent against the US dollar. After testing lows at 1.1560, the EUR/USD contract on Dubai Gold & Commodities Exchange is consolidating at that key 1.16 levels discussed in my column earlier this month. We would expect further pressure on euro prices heading into July, with 1.1430 the next strong support level.
Crude oil was trading lower on DGCX heading into the Opec meeting on June 22. The global energy picture is intriguing to say the last – while last week’s crude report showed massive drawdowns in inventories (crude oil inventories came in at 4.1 million barrels versus the 1.440 million expected and the 2.02 million previous), however data showed that production spiked up another 100,000 barrels a day, taking the 2018 total to a record high of 10.9 million barrels of output a day.
Crude markets have been shrugging off hints by Saudi Arabia and Russia that June may be the meeting in which they vote to cease the production cuts. If such a move were to materialise, our earlier downside targets in the band between 60-62 would come into range.
Along with the Opec meetings taking place on Friday, the Swiss National Bank and the Bank of England announce rates on Thursday with the US and UK GDP readings due out next week on June 28 and June 29 respectively.
Gaurav Kashyap is a market strategist at Equiti Global Markets
The views and opinions expressed in this article are those of the author and do not reflect the views of Equiti.
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
Company%20profile
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COMPANY%20PROFILE
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THE BIO
Favourite holiday destination: Whenever I have any free time I always go back to see my family in Caltra, Galway, it’s the only place I can properly relax.
Favourite film: The Way, starring Martin Sheen. It’s about the Camino de Santiago walk from France to Spain.
Personal motto: If something’s meant for you it won’t pass you by.
Iraq negotiating over Iran sanctions impact
- US sanctions on Iran’s energy industry and exports took effect on Monday, November 5.
- Washington issued formal waivers to eight buyers of Iranian oil, allowing them to continue limited imports. Iraq did not receive a waiver.
- Iraq’s government is cooperating with the US to contain Iranian influence in the country, and increased Iraqi oil production is helping to make up for Iranian crude that sanctions are blocking from markets, US officials say.
- Iraq, the second-biggest producer in the Organization of Petroleum Exporting Countries, pumped last month at a record 4.78 million barrels a day, former Oil Minister Jabbar Al-Luaibi said on Oct. 20. Iraq exported 3.83 million barrels a day last month, according to tanker tracking and data from port agents.
- Iraq has been working to restore production at its northern Kirkuk oil field. Kirkuk could add 200,000 barrels a day of oil to Iraq’s total output, Hook said.
- The country stopped trucking Kirkuk oil to Iran about three weeks ago, in line with U.S. sanctions, according to four people with knowledge of the matter who asked not to be identified because they aren’t allowed to speak to media.
- Oil exports from Iran, OPEC’s third-largest supplier, have slumped since President Donald Trump announced in May that he’d reimpose sanctions. Iran shipped about 1.76 million barrels a day in October out of 3.42 million in total production, data compiled by Bloomberg show.
- Benchmark Brent crude fell 47 cents to $72.70 a barrel in London trading at 7:26 a.m. local time. U.S. West Texas Intermediate was 25 cents lower at $62.85 a barrel in New York. WTI held near the lowest level in seven months as concerns of a tightening market eased after the U.S. granted its waivers to buyers of Iranian crude.
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
COMPANY%20PROFILE%20
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Profile box
Founders: Michele Ferrario, Nino Ulsamer and Freddy Lim
Started: established in 2016 and launched in July 2017
Based: Singapore, with offices in the UAE, Malaysia, Hong Kong, Thailand
Sector: FinTech, wealth management
Initial investment: $500,000 in seed round 1 in 2016; $2.2m in seed round 2 in 2017; $5m in series A round in 2018; $12m in series B round in 2019; $16m in series C round in 2020 and $25m in series D round in 2021
Current staff: more than 160 employees
Stage: series D
Investors: EightRoads Ventures, Square Peg Capital, Sequoia Capital India
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Famous left-handers
- Marie Curie
- Jimi Hendrix
- Leonardo Di Vinci
- David Bowie
- Paul McCartney
- Albert Einstein
- Jack the Ripper
- Barack Obama
- Helen Keller
- Joan of Arc
MATCH INFO
Qalandars 112-4 (10 ovs)
Banton 53 no
Northern Warriors 46 all out (9 ovs)
Kumara 3-10, Garton 3-10, Jordan 2-2, Prasanna 2-7
Qalandars win by six wickets
Key developments in maritime dispute
2000: Israel withdraws from Lebanon after nearly 30 years without an officially demarcated border. The UN establishes the Blue Line to act as the frontier.
2007: Lebanon and Cyprus define their respective exclusive economic zones to facilitate oil and gas exploration. Israel uses this to define its EEZ with Cyprus
2011: Lebanon disputes Israeli-proposed line and submits documents to UN showing different EEZ. Cyprus offers to mediate without much progress.
2018: Lebanon signs first offshore oil and gas licencing deal with consortium of France’s Total, Italy’s Eni and Russia’s Novatek.
2018-2019: US seeks to mediate between Israel and Lebanon to prevent clashes over oil and gas resources.
The specs: 2018 Audi RS5
Price, base: Dh359,200
Engine: 2.9L twin-turbo V6
Transmission: Eight-speed automatic
Power: 450hp at 5,700rpm
Torque: 600Nm at 1,900rpm
Fuel economy, combined: 8.7L / 100km
SPECS
Engine: 4-litre V8 twin-turbo
Power: 630hp
Torque: 850Nm
Transmission: 8-speed Tiptronic automatic
Price: From Dh599,000
On sale: Now
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
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Who is Allegra Stratton?
- Previously worked at The Guardian, BBC’s Newsnight programme and ITV News
- Took up a public relations role for Chancellor Rishi Sunak in April 2020
- In October 2020 she was hired to lead No 10’s planned daily televised press briefings
- The idea was later scrapped and she was appointed spokeswoman for Cop26
- Ms Stratton, 41, is married to James Forsyth, the political editor of The Spectator
- She has strong connections to the Conservative establishment
- Mr Sunak served as best man at her 2011 wedding to Mr Forsyth
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Citadel: Honey Bunny first episode
Directors: Raj & DK
Stars: Varun Dhawan, Samantha Ruth Prabhu, Kashvi Majmundar, Kay Kay Menon
Rating: 4/5
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TERMINAL HIGH ALTITUDE AREA DEFENCE (THAAD)
What is THAAD?
It is considered to be the US's most superior missile defence system.
Production:
It was created in 2008.
Speed:
THAAD missiles can travel at over Mach 8, so fast that it is hypersonic.
Abilities:
THAAD is designed to take out ballistic missiles as they are on their downward trajectory towards their target, otherwise known as the "terminal phase".
Purpose:
To protect high-value strategic sites, such as airfields or population centres.
Range:
THAAD can target projectiles inside and outside the Earth's atmosphere, at an altitude of 150 kilometres above the Earth's surface.
Creators:
Lockheed Martin was originally granted the contract to develop the system in 1992. Defence company Raytheon sub-contracts to develop other major parts of the system, such as ground-based radar.
UAE and THAAD:
In 2011, the UAE became the first country outside of the US to buy two THAAD missile defence systems. It then stationed them in 2016, becoming the first Gulf country to do so.
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