U.S. Dollar Retreats after Early Rally Fails to Attract Buyers

September U.S. Dollar Index futures turned lower on the day after investors backed away from buying strength following hawkish comments from a high-ranking Fed official over the weekend. The index, which represents the dollar against a basket of currencies, was last reported at 94.455, down 0.028 or -0.03%. Its high for the session was 94.94.

The weaker dollar helped drive up the Euro with the EUR/USD reaching a high of 1.1330 before settling back to 1.13258, up 0.0005 or 0.04%. The British Pound also rebounded to 1.3156 before backing off to 1.3148, up 0.0074 or 0.57%.

Central Bank Symposium, Yellen Speech Likely to Cause Volatility

Without any economic reports to react to, investors attributed the volatile price swings to thin trading conditions ahead of the start of the central bankers’ symposium later in the week and a key speech by Fed Chair Janet Yellen early Friday.

Over the week-end, Fed Vice Chairman Stanley Fischer fueled a short-covering by the U.S. Dollar when he said he thought the central bank was close to achieving its employment and inflation targets.

Two-sided Message from FOMC, Fed Members?

This comes on the heels of last week’s U.S. Federal Reserve minutes from its July meeting which indicated that a rate hike is not imminent. However, regional Fed presidents William Dudley, Dennis Lockhart and John Williams all addressed the possibility of a September hike last week. All of this adds up to increased volatility by the U.S. Dollar.

Gold Fails to React to Turnaround in Dollar

December Comex Gold futures opened lower on the strength of the U.S. Dollar, putting it in a position to break into an area not seen since late July. The primary driver of the weakness was talk of a U.S. rate hike. Gold, however, recovered from its low at $1335.40, reaching an intraday level of $1342.70, but still remaining lower by $3.50 or -0.26%.

September Comex Silver futures collapsed to its lowest level since June 30, before finding support on a technical support level at $18.73. The spike lower suggests massive long liquidation.

Crude Oil Falls as China Dumps Products on Market

Crude Oil prices were under pressure on Monday, dropping as much as 3 percent after news that China had increased exports of refined products. More bearish news hit the market as U.S. oil producers added rigs for an eighth consecutive week. Finally, reports surfaced indicating that Iraq and Nigeria had increased exports.

U.S. West Texas Intermediate (WTI) crude for September was down over $1.25, or 2.6 percent to $47.27 per barrel. This was up from $47.09. Brent crude futures also fell about $1.25 to $49.58 per barrel.

China’s July exports of diesel and unleaded gasoline increased by 181.8 and 145.2 percent respectively when compared to the same month last year. The headline number was 1.53 million tons and 970,000 tons respectively.