Daily Currency Update

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The U.S. dollar trades lower after dovish comments from a hawkish Fed official.

USD - United States Dollar

Yesterday, Fed hawk, Esther George, said, “…should incoming data point to a broadly weaker economy, adjusting policy may be appropriate to achieve the Federal Reserve’s mandates for maximum sustainable employment and stable prices.” The Kansas City boss had dissented at the past two meetings because the economy is doing well. She said that holding rates would have been "appropriate," but she's watching consumer spending as she determines if she'll favor any additional cuts.

Fed Chairman Powell will have a busy week with multiple opportunities to re-calibrate his outlook as market participants continue pressing for a third rate cut by the end of this month. Powell will provide brief remarks at a film premiere in Salt Lake City later today. His second presentation on “a view from the Federal Reserve Board of Governors" will take place tomorrow at the National Association for Business Economics annual meeting in Denver. His third speech will be as part of a panel discussion at the Fed Listens event hosted by the Federal Reserve Bank of Kansas City on Wednesday. The interesting thing is that these three speeches will take effect before the FOMC Meeting Minutes release at 2:00 pm EST on Wednesday. Finally, Powell will join his colleagues on the board, and he will chair an open meeting of the panel to consider a final rule on prudential standards for large banks. The board meeting will also be live-streamed online this Thursday.

Key Movers

The conflict between President Trump and House Democrats over the impeachment inquiry is getting worse. Andrew Bakaj, the attorney for the first whistleblower who explained attempts by President Trump to press his Ukrainian counterpart to investigate a political rival, is pointing out that his firm represents, “multiple whistleblowers.” Mark Zaid, another attorney representing the initial whistleblower, added that there is a second whistleblower with fresh knowledge of some accusations related to the initial charge. This situation will add more fuel to the initial problem and likely cause more volatility in the FX market.

Boris Johnson said in a defiant tone that the U.K. will leave the EU as planned, regardless of whether the EU accepts his latest offer. The thing is that he has until the end of this week. The PM is prepared to launch legal action at the Supreme Court to avoid having to write a letter asking for a delay to Brexit as set out in the Benn Act. Prospects of a Brexit deal are fading after talks between the two sides stalled and European leaders cast doubt on reaching an agreement in time for Halloween. This week can be decisive for the future of the U.K. and there are more questions than answers. Can Johnson get a Brexit deal, and is he even trying to? Will he delay Brexit or take Britain out without a deal? Bank of England Governor Mark Carney found himself center-stage after the original Brexit vote in 2016, and would likely do so again.

German factory orders came lower than the expected number of -0.4 percent. According to the Federal Statistical Office in Germany (Destatis), price-adjusted new orders in manufacturing decreased in August 2019 a seasonally and calendar adjusted 0.6 percent on the previous month. As a consequence the EUR/USD pair decreased 20 pips in overnight trading towards 1.0962, but it has bounced from there, almost touching the 1.100 handle around 8 am EST.

Expected Ranges

USD/CAD: 1.3285 - 1.3335 ▼

EUR/USD: 1.0964 - 1.1017 ▲

GBP/USD: 1.2257 - 1.2433 ▼

AUD/USD: 0.6710 - 0.6775 ▼

NZD/USD: 0.6255 - 0.6312 ▼