Investing.com - Here are the top five things you need to know in financial markets on Thursday, August 18:
1. Dollar crashes to 8-week lows on divided Fed
The dollar sank to the lowest level in nearly eight weeks on Thursday, after minutes of the Federal Reserve's July policy meeting showed committee members remained divided on the timing of the next rate hike.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell to 94.31, the lowest since June 24. It was last at 94.42 by 5:50AM ET (09:50GMT), down 0.3%.
Fed funds futures are currently pricing in just a 9% chance of a rate hike by September, compared to 15% the day before. December odds were at around 46%, down from 53% a day earlier, according to Investing.com's Fed Rate Monitor Tool.
Against the yen, the dollar slumped to 99.65, coming close to 99.55 set on Tuesday, the lowest level since the U.K.’s decision to leave the European Union in late June. It was last at 100.27, mostly flat on the day.
The euro, meanwhile, climbed to an eight-week peak of 1.1332 against the dollar before falling back to 1.1312, up 0.2%.
2. U.S. data, Fed speakers in focus
Market players will pay close attention to comments from a few Federal Reserve officials later in the day as they continue to speculate over the timing of the next U.S. rate hike.
New York Federal Reserve President William Dudley speaks at 10:00AM ET (14:00GMT), San Francisco Fed President John Williams will deliver a speech in Anchorage, Alaska, at 4:00PM ET and Dallas Fed President Robert Kaplan speaks at 8:00PM ET.
Besides the Fed speakers, traders will be watching closely when weekly jobless claims are released at 8:30AM ET (12:30GMT). The Philadelphia Fed survey is also released at 8:30AM.
The economic reports will be scrutinized after the FOMC minutes revealed that policymakers wanted to see more data before deciding to raise rates.
3. Oil extends rally to fresh 5-week highs; Brent briefly tops $50
Oil prices were higher for the sixth straight session on Thursday, extending this month's impressive rally to hit fresh five-week highs amid bullish momentum.
U.S. crude was up 20 cents, or 0.43%, at $46.99 a barrel during morning hours in New York, while Brent dipped 11 cents, or 0.22%, to $49.74, after touching a session peak of $50.05, the most since July 4.
Crude prices are up almost 13% in the five sessions leading up to Thursday, amid indications major oil producers are reconsidering a collective production freeze in a bid to boost the market.
However, market players remained skeptical that the meeting would result in any concrete actions after Saudi Arabia signaled that it could boost its output to a new record level in August.
4. Post-Brexit U.K. retail sales rise much more than expected
Retail sales in the U.K. posted a larger increase than expected in July, suggesting that British consumers were taking the U.K.’s decision to leave the European Union in stride, official data showed on Thursday.
The Office for National Statistics said that retail sales rose 1.4% in June, the biggest jump since January and blowing past expectations for a 0.2% increase. Year-on-year, retail sales climbed 5.9%. Consensus had forecast a 4.2% rise.
The upbeat data followed better than expected readings on employment and inflation earlier this week, easing concerns over post-Brexit growth prospects.
Sterling spiked to a two-week high of 1.3172 against the dollar before falling back to 1.3165, up 1% on the day.
Earlier this week, the pound had threatened to test a 31-year low of 1.2798 set in July, amid concerns that forthcoming U.K. data could provide the first proof of economic damage from the Brexit vote in June.
5. Plunging exports add to Japan worries
Japan's exports tumbled in July at the fastest pace since the global financial crisis, weighed down by a strong yen and sluggish global demand.
Exports plunged 14% on-year, marking their tenth straight month of decline and the biggest drop since October 2009. Imports, meanwhile, sank 24.7%, worse than forecasts for a drop of 20.6%.
The disappointing numbers underlined the need for further stimulus measures to reinvigorate the faltering domestic economy.