USD Falters on General Market Strength
Tuesday 18 October, 2022
Daily Currency UpdateThe USD started the week down against the basket of other majors as risk appetite returned to equity and commodities markets. Major stocks markets all moved up on Monday with futures markets continuing to gain in early morning trading. On the data front, Industrial production in the USA was up more than expected on Tuesday, coming in up 0.4% versus an expected 0.1% gain. Manufacturers also maintained use of facilities with 80.4% of production capacity being used last month.
Key MoversThe Euro continues to make gains in today’s trading after the Germany’s ZEW sentiment survey came in better than expected. The survey, which measures investor confidence moved up to -59.7. This data adds to the base case the ECB should continue to raise rates as inflation continues to be an issue in the trading zone. The GBP has levelled off and lost some ground from yesterday’s positivity. This comes after Prime Minister Liz Truss spoke on TV last night and apologized for the “mistakes” caused by the mini budget released by her government in its early days. Now that the new Chancellor of the Exchequer Jeremy Hunt has undone the decisions of his predecessor, the focus will shift to the Bank of England. In Asia, further weakness in the yen has pushed the USDJPY cross into overbought territory. The pair is approaching the high of July 1990. If moves fail to get there, we could see retracement back to more recent levels. The Australian dollar also maintained gains against the USD in the overnight session. This was not on the back of any significant data points, but the AUD got a lift from stronger risk appetite in markets. The Canadian dollar made gains yesterday on stock rallies in North American markets. The CAD is continuing to make gains in morning trading somewhat. Gains are muted compared to yesterday as we are seeing oil prices retreat from $88 a barrel to $83. The most important data for the Canadian will be tomorrow with the release of the monthly Consumer Price Index. Markets are expecting inflation of 6.8% but a large diversion from that in either direction could impact next week’s interest rate announcement from the Bank of Canada.
- EUR/USD: 0.9809 - 0.9869 ▲
- GBP/USD: 1.1265 - 1.1430 ▼
- AUD/USD: 0.6278 - 0.6339 ▲
- USD/CAD: 1.3661 - 1.3773 ▼