The U.S. Dollar remained mostly steady today with a tilt for the upside, with the Pound being the biggest mover and worst performer against it this morning
Overview
This stability comes as U.S. equity futures edged higher, supported by positive earnings reports from Morgan Stanley and other major banks. The S&P 500 and Nasdaq 100 contracts gained 0.1%, recovering from the previous session’s losses driven by a profit warning from Dutch chip equipment maker ASML Holding NV. Additionally, Nvidia Corp. saw a rebound in early-hours trading after a significant drop on Tuesday. The market’s cautious optimism is further bolstered by expectations that the Federal Reserve will continue its easing path, providing broad support for investment banking activities.
Tomorrow, all eyes will be closely monitoring the European Central Bank’s rate decision, as well as U.S. Retail Sales, Jobless Claims, and Industrial Production data. Speeches by Federal Reserve officials, including Austan Goolsbee and Christopher Waller, will also be in focus for any hints on future monetary policy direction being clearer. Additionally, China’s struggles with stimulus will continue to weigh on global sentiment, as already seen by weakening to the Antipodean currencies in AUD and NZD.
What to Watch This Week…
- ECB Meeting on Thursday
- U.S. Retail Sales, 8:30 Thursday; Industrial Production 9:15AM
- Fed Speakers, Friday
- Monex USA Online is always open
GBP ⇓
The Pound fell to its weakest level since August 20th following economic data revealing an unexpected slowdown in inflation. In September, the Consumer Price Index came in flat, thus reducing the yearly average from 1.9% to 1.7%. Meanwhile, Retail Prices actually contracted instead of advancing by 0.1% as estimated. The fall in prices makes it more likely that the Bank of England will not hesitate to cut interest rates at their next meeting on November 7th. The economic situation in the U.K. needs a boost from government spending so the idea of lower borrowing costs is a welcome one for the current administration.
MXN ⇓
The Mexican Peso is down by over 1.0% at the time of writing, declining as a result of negative reactions to former President Trump’s promise to increase tariffs. As Mexico has become the number one trading partner for the U.S., any potential disruption in the current state of affairs and trading agreements could prove very challenging for businesses. The positive effects of “Nearshoring,” moving supply-chain logistics closer to home after the shocks of the pandemic, could truly be at risk if a return of Trump policies mean ‘protectionism.’ At an economic event in Chicago, Trump defended his agenda in trying to dissuade manufacturing from being overseas by imposing tariffs all across the globe.
