USD claws back on oil and inflation warning
Monday 14 November, 2022
Daily Currency UpdateThe USD is starting the week by regaining some of the position it gave up last week after Fed Governor Waller went on the record over the weekend. His comments that “we’ve got a long, long ways to go to get inflation down” serves as a reminder that the bank isn’t done with its hawkish tone or rate hikes. Oil has also dropped over the weekend back under the key $90 per barrel for WTI after OPEC cut its demand outlook due to supply chain issues. The main culprit seems to be concerns in Chinese manufacturing with a resurgence in COVID-19 cases. Markets will be looking to see how much of the actual daily production was cut after promises made at their last meeting. In equities markets, the early trading in North America has market pointing towards a lower open.
Key MoversIn the APAC sessions, The Japanese yen is coming off of its best week in the last 2.5 months. The Japanese does have some big announcement this week as well with the release of machine orders, industrial production, and national CPI inflation data. The GBP continues to regain the position it lost during the Liz Truss sell off, currently sitting at positions last seen in early September. There are a couple of key data points for the pound this week with the most important being Thursday’s release of the autumn budget statement from newly minted Finance Chief Jeremy Hunt. The Canadian dollar was a winner last week with the release of US inflation numbers on Thursday. Those gains have stalled this morning slightly as oil falls off following the release of OPEC’s monthly report. The drop in demand forecasts has oil prices down to the $856 per barrel mark, well under the important $90 price, and is putting some pressure on the Canadian dollar. The Bank of Canada will find out this week if it’s rate hiking strategy has started to sink in. Canada’s CPI inflation data is out Wednesday and a better than 6.9% print will give the bank room to slow down the pace of hikes, something the market is hoping for.
- EUR/USD: 1.0276 - 1.0367 ▲
- GBP/USD: 1.1744 - 1.1822 ▲
- AUD/USD: 0.6666 - 0.6719 ▲
- USD/CAD: 1.3248 - 1.3305 ▼