Loonie continues to weaken against the USD

Key Movers

The US dollar, which was on a 3-day rally, stalled after Federal Reserve Chairman Jerome Powell’s speech. There were no comments on any monetary policy or further guidance, but markets will be looking for clues from the upcoming Fed members gathering later today. During the last meeting of Fed officials, they agreed that data would guide the next decisions. While they haven’t ruled out further policy tightening, it seems that the Fed is done raising interest rates for now. The US Dollar Index (DXY) traded in the 105-region at the time of writing. This left some room to recover from last week's decline.

The euro was seen regaining some balance against the greenback, urging EUR/USD to rebound from its earlier lows. The pair was last seen trading at 1.0707 levels. There seems to be a similar sentiment in the European Central Bank (ECB), just like the Federal Reserve, as markets currently lean more towards an extended standstill in the policy tightening measures, most likely until the latter part of 2024.

The pound sterling continues to fall amid cautiousness over the United Kingdom’s performance in the third quarter. The market remains cautious ahead of the UK’s Q3 gross domestic product (GDP) data release. Investments in the business sector remained lower as higher borrowing costs forced businesses to defer their capacity expansion plans. UK Chancellor Jeremy Hunt has again hinted that he is going to recommit to the need for tightening overall spending later this month in a bid to ease the sticky inflation. The risks of a global recession have resurfaced prominently due to the ongoing Middle East tensions, which may lead to a spike in energy prices by disrupted supply chains. GBP was last seen trading at the 1.2300 level against the USD.