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Fed Powell confirms that the Fed is in a "wait and see" mode, pushing the Greenback higher

USD - United States Dollar

A few minutes ago, the producer price index for final demand was released, and it increased 0.4 percent in October, according to the U.S. Bureau of Labor Statistics. The expected number was 0.3 percent, and for now, it is helping the U.S. dollar index to hold gains. The USD/EUR is 0.05 percent higher, trading at 0.9093.

Powell's testimony was the confirmation of good news for the "risk on" environment, where he showed his rose-colored view of the U.S. economy yesterday in the congress. This has also helped the U.S. dollar to soar in the last few days and has sent market participants' appetite to buy risky assets. But, is this a buy the rumor sell the news situation for the U.S, dollar?. According to Powell, the central bank saw little need to cut interest rates further after making three reductions since July. Powell repeated many times that market participants should not expect the Fed to cut rates at its final meeting of this year, on Dec. 10-11th. According to Powell, the central bank was comfortable entering a wait-and-see phase.

Key Movers

Chinese activity data for October came in weaker than expected. Industrial Production came in at 4.7 percent versus the 5.5 percent expected. Retail sales came in at 7.2 percent versus the 7.8 percent read. It is clear that trade war impacts are hitting the external sector, and domestic demand is not holding up as expected. The USD/CNH pair is trading flat at 7.0250 this morning.

Germany avoided a likely first recession after six years, stopping the speculation that the government will add fiscal stimulus any time soon. The EUR/USD spiked 21 pips from 1.0994 to 1.1015 right after the news but, it erased gains quickly.

European market participants probably noticed that a neutral Powell in the U.S. (i.e. there would no be more hikes in the short term in the U.S.) would weigh more in the shared currency. So, the EUR/USD is trading lower at around 1.0998, or 0.08 percent down, at the time of this writing.

The Aussie dollar is tanking on the weak employment report released last night. The unemployment rose back to 5.3 percent versus the forecasted 5.2 percent, which happened to be the previous unemployment number as well (5.2 percent). The employment change contracted by -19k, when the expected number was positive +16.2k. This is the first contraction since September 2016. At the same time, full-time employment fell -10.3k versus the prior +26.2k. The AUD/USD pair is plunging 0.88 percent at the time of this writing.

Expected Ranges

USD/CAD: 1.3252 - 1.3280 ▲

EUR/USD: 1.0995 - 1.1032 ▲

GBP/USD: 1.2820 -1.2880 ▲

AUD/USD: 0.6769 - 0.6809 ▼

NZD/USD: 0.6348 - 0.6403 ▼