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US dollar up on global inflation concerns

Wednesday 19 October, 2022

Daily Currency Update

The US dollar is up mildly this morning as futures are down heading into the North American session.  This is following drops in Asian and European Markets in the overnights.  The USD Index (DXY) is up 0.6% so far.  On the data front this morning, mortgage applications in the US were down -4.5% this month, showing that more people are sitting out buying a house with rates on the rise.  Later this morning, President Joe Biden is expected to announce the completion of a program from the spring by releasing an additional 15 Million barrels of oil from the Strategic Petroleum Reserve.

Key Movers

The GBP is down this morning following news that inflation in the UK jumped back over 10% last month.  The biggest driver of this was a 14.8% increase in food prices from a year ago.  This puts more pressure on both the Bank of England and the already embattled government of Liz Truss. Eurozone inflation came in at 9.9% for last month, slightly lower than the 10% that was expected.  This still will reinforce though the hawkish tone being taken by the ECB ahead of its rate announcement next week. In Asian markets, the Japanese yen continues to lose against the USD, edging up against 32 year lows.  The Central Bank continues to stay committed to ultra-low interest rates. The Canadian dollar is facing headwinds today as oil drops and inflation stays strong.  Earlier this morning, Canadian inflation for September came in at 6.9%, slightly higher than the consensus expectation of 6.8%.  This will undoubtedly put pressure on the Bank of Canada ahead of next Wednesday’s intertest rate announcement.  Investors have shifted expectation already by starting to price in a 75-point hike, compared to the 50-points markets had been pricing in previously.  Oil is back into the $82 a barrel range ahead of an expected release of stock from the Strategic Petroleum Reserve.

Expected Ranges

  • EUR/USD: 0.9768 - 0.9869 ▼
  • GBP/USD: 1.1228 - 1.1355 ▼
  • AUD/USD: 0.6268 - 0.6323 ▼
  • USD/CAD: 1.3715 - 1.3803 ▲