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USD stabilizes on mixed signals

Daily Currency Update

The USD Index (DXY) is starting the day back over 112 as equities futures and commodities are pointing to a lower open in the North American trading session.  Yesterday’s Purchasing Manager Index mix came in lower than expected pointing to lower business confidence.  Today, we will see the consumer side with the CB Consumer Confidence release later this morning.  The most impactful data this week is likely to be Friday’s PCE inflation release as markets will be looking for data that backs up a slowing of rates hikes out of the Fed.

Key Movers

The pound has maintained gains this morning with the official appointment of Rishi Sunak as Prime Minister.  Markets are awaiting the appointment of new cabinet and indication of the direction the new government wants to take to fight inflation.

In the Eurozone, there was some positivity in European trading as the Business Climate data from Germany came out stronger than expected at 84.3.  This shows that business owners in Europe’s biggest economy have a brighter outlook for the next 6 months.  Many euro traders remain focused on the interest rate announcement from the ECB on Thursday.

Asian markets are seeing the JPY regain some ground against the American dollar coming off of the highs of 150 as the Government of Japan once more considers further intervention on behalf of the Yen.  Elsewhere, the CNY started the week lower to the highest level since 2008.  This is likely reaction to the release of third quarter growth of 3.9% which disappointed some.

The Canadian dollar lost ground through the day yesterday and that theme is continuing in early trading.  With no significant Canadian data today, this is on the back of WTI oil bien down $2 per barrel from yesterday and equities futures trading down.  Essentially, it seems that risk aversion is taking money to US treasuries and the CAD is losing ground on this sentiment.  This week’s focus will be tomorrow’s Bank of Canada rate announcement to see if the bank raises rates by the consensus 50 points.

Expected Ranges

  • EUR/USD: 0.9830 - 0.9896 ▲
  • GBP/USD: 1.1262 - 1.1336 ▲
  • AUD/USD: 0.6284 - 0.6339 ▲
  • USD/CAD: 1.3682 - 1.3760 ▲