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Demand for USD eases after rally

Daily Currency Update

USD - United States Dollar

Demand for the US dollar eased slightly on Thursday while the Canadian dollar, Australian dollar and New Zealand dollar rose. The US Dollar Index was down 0.11%, trading at 93.98 at the time of writing.

US CPI came in a touch higher than expected with the annual level of inflation now back up to 5.4% when analysts expected a hold at 5.3%. On a month-by-month basis CPI rose 0.4% for September, with the core reading (which strips out fuel and food prices) ticking up by 0.2%. The marginally higher reading wasn't enough to support USD and after some small initial gains it slowly lost value across the board. It appears the level of US inflation is plateauing, with many expecting that it will start to fall back as we head into 2022.

The minutes from the September Federal Open Market Committee meeting confirmed tapering of pandemic stimulus is likely to start from November or December this year. Policymakers discussed a likely path of reducing asset purchases by $15 billion a month.

Key Movers

The pound is benefitting from the prospect of higher interest rates, however some extra upward pressure has been added over the past 24 hours due to US dollar weakness. It’s another quiet day on the data front from the UK so expect COVID-19 news and external events again to be the potential main drivers in the pound’s value. GBPUSD was trading at around 1.3678 and GBPEUR at around 1.1803 at the time of writing.

The Australian dollar and New Zealand dollar edged higher against the softer US dollar on Thursday, underpinned by rising commodity prices. AUDUSD was up 0.49% trading at 0.7415 while NZDUSD was up 0.85% at 0.7022 at the time of writing.

The Canadian dollar also strengthened against the US dollar as oil prices continued to rally and upbeat manufacturing data. Canadian manufacturing sales rose 0.% to $60.3 billion in August, according to Statistics Canada. USDCAD was down 0.51% at 1.2376 at the time of writing.

Expected Ranges

  • EUR/USD: 1.1568 - 1.1621 ▼
  • GBP/USD: 1.3634 - 1.3726 ▲
  • AUD/USD: 0.737 - 0.7425 ▲
  • USD/CAD: 1.2355 - 1.2449 ▼