Technical analysis and trading recommendations- https://fxpcm.com/en/fx/xauusd-dollar-weakened-currency-market-16082016
Overview and Dynamics
Weak data on retail sales in the US in July, for the second quarter GDP and labor productivity, published earlier last week, significantly weakened the likelihood of higher interest rates in the US in the coming months.
So, the probability of increasing rates in the US in September, is currently estimated at 12%. The probability of interest rate increase in December is also reduced, being at around 40%.
The WSJ dollar index, which tracks the greenback against a basket of other currencies, was down 0.2%, to 86.18.
The outcome of last week was the growth of the American stock indices, rising oil prices, the weakening of the dollar against most currencies.
Last Thursday, the first time since December 31, 1999, all three indices DJIA, S&P500, Nasdaq reached record levels in one day. S&P500 closed at a record high for the ninth time this year, and the DJIA - in the eighth.
On Monday, the president of the Federal Reserve Bank of San Francisco John Williams said the Fed should either increase the target level of inflation, which currently stands at 2%, or start using a new benchmark, based on the prices or the economic growth levels. A higher target inflation rate may give the Fed more room to save the interest rates at current levels.
This indicates a lack of consensus among the members of the Fed's leadership on the issue of raising interest rates in the United States.
Comments John Williams led to a large-scale reduction of US dollar in the Asian session on Tuesday. Quotes of gold rose today to $ 10 to the level of 1350.00 dollars per ounce.
Risks with respect to the global economy, as well as lower interest rates in a number of the world's central banks with the prospect of further easing of monetary policy will support the gold price.
The urgency of long positions on gold is also stored on the back of weak US economic data and the Fed's restrained position on raising interest rates