Daily Currency Update

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U.S. Dollar Index Up Slightly Ahead of the FOMC Rate Announcement Next Week.

USD - United States Dollar

U.S. fundamentals have missed of late with data such as retail sales, and ISM manufacturing has driven down the Dollar Index on a monthly view. Yet this morning and also on the week the Dollar Index is moving higher even as chances of a Federal Reserve interest rate cut next week have risen to over a 90 percent probability factor. Basic investment principles are when the interest rate is low in a country market participants put a hold on investment, and the currency of the country would therefore weaken, one can argue this for the greenback heading into next week and the last quarter of 2019.
The USD and JPY both benefited from shifts in risk appetite on Thursday with the USD jumping two-tenths of a percent against key dollar counterparts, while the Euro slipped below 1.11 against the greenback. The combined unit gave up recent gains following softer than expected PMI data and mostly muted commentary from the ECB. Outgoing President Mario Draghi opted to maintain the current policy setting issuing a sustained message of downside risk and guidance. Attentions now turn to incoming President and Ex IMF chief Christine Lagarde and guidance on future QE policy as a key driver of future Euro direction.

Key Movers

Oil inventories this week showed a draw of -1.7M in comparison to the consensus of 2.5M, causing WTI crude oil to leap over $2 a barrel and almost 3 dollars for the week.
The Great British pound closed the day as one of the worst performers as Johnson announced he would put to parliamentary vote a call for a General Election to be held on December 12. The announcement adds another layer to recent Brexit uncertainty and opens the door to an increased chance of a no-deal Brexit should Johnson manage to increase his parliamentary majority. Sterling fell through 1.29 and 1.28 to touch 1.2785 and remains vulnerable to Brexit headlines.

Expected Ranges

EUR/USD: 1.1095 -1.1104 ▼

GBP/CAD: 1.2808 - 1.2862 ▲

USD/CAD: 1.3057 - 1.3076 ▼

AUD/USD: 0.6809 - 0.6833 ▼

NZD/USD: 0.6355 - 0.6385 ▼