USD down on inflation outlook, shutdown fears
Daily Currency Update
Demand for the US dollar was down this morning after a key inflation measure fueled expectations that the bank might hold rates. The US Dollar Index (DXY) was down 0.43% this morning. The Fed’s preferred inflation measure, the Personal Consumption Expenditure (PCE) index, showed prices were up 3.5% year over year and month over month inflation was only 0.1%, which is the slowest inflation growth since March. Equities markets gained on the news in early trading and oil advanced back over $92 a barrel. This was tempered by Washington D.C. The US government seems headed for a shutdown as house Republicans can’t agree on a short-term continuing resolution aimed at keeping the lights on.Key Movers
The US benchmark WTI oil price was back over $92 a barrel and Brent Crude was over $97 a barrel as traders remain concerned about global supply shortages. Markets are waiting for a meeting of OPEC+ next week to see if the oil cartel deepens current production cuts to keep prices high.The GBP saw a bounce in the overnight markets as UK GDP numbers showed 0.6% growth year over year, better than the 0.4% expected.
The Canadian dollar was holding position against its US counterpart after oil climbed back over $92 a barrel this morning and stock markets in North America opened higher. This is despite the GDP release for July coming in this morning showing 0.0% growth opposed to an expected 0.1% bump in activity. This slowdown in economic growth though is leading investors to think he BoC might be down with rate hikes as signals are that the economy may be recession bound in early 2024.
Expected Ranges
- EUR/USD: 1.0540 - 1.0661 ▲
- GBP/USD: 1.2187 - 1.2286 ▲
- AUD/USD: 0.6392 - 0.6518 ▲
- USD/CAD: 1.3420 - 1.3541 ▼