On the foreign exchange market, the dollar index, measuring the fluctuations of the greenback against a basket of six reference currencies, yielded Tuesday evening 0.08% to 96.77 after climbing Monday by 0.7%. The euro, up early in the session, ended stable at $1.12886, after the appointment of Christine Lagarde at the head of the European Central Bank, to succeed Mario Draghi, whose mandate expires on October 31.
On the commodity side, a barrel of crude oil WTI lost Tuesday 4.81% to settle at $56.25 on the Nymex, while the Brent North Sea sank 4.09% to $62.40 at the time of the Nymex closing (September futures contract). Fears over the demand for crude have taken over the extension of the agreement to reduce production of OPEC and its allies.
In the absence of notable statistics on Tuesday in the United States, traders followed the speeches of Fed officials John Williams (head of the New York Fed) and Loretta Mester (leader of the Cleveland Fed). The latter has not been in a great hurry to lower key interest rates, saying that “the markets have been preaching rate cuts (…) but the markets have shown that they are not always right in their forecasts on the evolution of the economy “. She added that she would rather wait to gather more information on the economic situation before changing monetary policy.
For its part, the RBA, the Australian central bank, cut interest rates on Tuesday at the historically low level of 1% to support domestic growth.
In the US bond markets, the 10-year T-Bond yield fell 5 basis points to 1.98%, despite Mrs. Mester’s rather firm remarks. The CME Group’s Fedwatch tool still showed Tuesday night a 100% probability of a rate cut at the next Fed meeting on July 30th and 31st, with a 25.6% chance of a decline, no not a quarter of a point, but half a point.
