Home Daily Commentaries USD losing on surge in stocks and commodities

USD losing on surge in stocks and commodities

Daily Currency Update

The USD is trading down broadly this morning following yesterday’s moves in equities markets and an early bump on WTI oil prices.  The USD Index (DXY) is down to just over 110, with oil rising back over $86 a barrel.  Further guidance on oil will come later this morning with the release of the oil inventories from Cushing Oklahoma.  Also out this morning, mortgage applications fell off by -1.7%, further evidence that less people are entering the home buying market with rates on the rise.  Later this morning, we will see new home sales number for September which are expected to fall off by -13%

Key Movers

The GBP is up this morning, reacting to positive signals from the new Conservative Government.  The new PM has said that he will make fiscal stability the tenant of his government’s upcoming budget. This seems to be calming markets and leading strength to the Pound.

The Euro also continues to gain ground versus the USD ahead of tomorrow’s ECB rate announcement.  Markets have proved in a 93% chance of the central bank raising rates by 75 basis points.  Investors will be looking to the press release and press conference for changes in language pointing to changes in short term direction.

In Asia-Pacific, the JPY continues a volatile track on the back of intervention from the Bank of Japan.  In Australia, expectations for further rate hikes are back on the table as the inflation print this morning came in at 7.3% higher than the 7.1% markets were expecting.

Today is interest rate day in Canada. At 10 AM EST, the Bank of Canada will make its announcement on rate and is expected to hike rates by as much as 75 points.  Investors have been expecting a 50-point hike after the last meeting but higher inflation has revised those expectations.  There is also a press conference after this announcement so investors will be looking to the verbiage to gain an understanding of where the BOC might go next.

Expected Ranges

  • EUR/USD: 0.9939 - 1.0046 ▲
  • GBP/USD: 1.1437 - 1.1613 ▲
  • AUD/USD: 0.6369 - 0.6495 ▲
  • USD/CAD: 1.3512 - 1.3650 ▼