Home Daily Commentaries Profit taking continues for the USD, pushing it lower

Profit taking continues for the USD, pushing it lower

Monday 12 September, 2022

Daily Currency Update

The US dollar continues to fall, following the financial markets fully pricing in a 75 bps Fed rate hike next week. Fed Chair Powell signaled the need to "keep at it" regarding tightening and talked about the importance of managing inflation expectations last week. On a similar note, on the back of the ECB's 75bp hike, Lagarde gave some hope for Euro bulls last week. Furthermore, some hawkish comments from Bundesbank President Joachim Nagel over the weekend, along with natural gas prices being in correction mode thanks to developments in Ukraine, helped the Euro erase some losses. It is important to note that the position of the market was very short EURUSD, which might have also caused a short-term bounce (EUR), and fall of the USD.

Key Movers

In the UK, manufacturing production numbers came in below expectations;  industrial production also fell below forecast. However, the sterling (GBPUSD) managed to increase 0.9% at the time of this writing due to USD weakness, toward 1.1700 handle. Of course, for the EURUSD and GBPUSD to bounce, the focus today has been the Russia-Ukraine war, with the Ukraine gaining territory on the back of the potential path to reconciliation. The Bank of England meeting has been pushed back a week due to the Queen's passing, so the currency market has another week in a wait-and-see mode, which can be very optimistic, with the USD having some downward pressure.

Expected Ranges

  • EUR/USD: 1.0064 - 1.0194 ▲
  • GBP/USD: 1.1603 - 1.1709 ▲
  • AUD/USD: 0.6826 - 0.6898 ▲
  • USD/CAD: 1.2966 - 1.3053 ▼