The U.S. Dollar is back on the gaining side, primarily improving against Euro by over half a percent and with the Bloomberg Dollar Spot Index rising by 0.2%.
Overview
This movement is largely attributed to the optimism surrounding the Federal Reserve’s ability to achieve a “soft landing” by tightening monetary policy without stifling economic growth. The bond market also saw significant activity, with U.S. Treasury yields declining by four basis points to 3.74%. This decline in yields ultimately reflects growing confidence among investors that the Fed’s monetary easing program will support both the stock and credit markets.
Looking ahead, the market is closely watching several key events this week that could influence the Dollar’s trajectory. These include speeches by multiple Federal Reserve officials, such as Atlanta Fed President Raphael Bostic and Fed Governor Lisa Cook. Additionally, the release of U.S. nonfarm payrolls data on Friday will be a critical indicator of economic health and could impact the Fed’s odds of cutting into interest rates consistently. Investors are also keeping an eye on global developments, such as the European Central Bank’s recent inflation data and potential interest rate cuts, which could further fuel the Buck’s rise over the shared currency
What to Watch This Week…
- US Nonfarm Payrolls, Friday 8:30AM
- Monex USA Online is always open.
GBP ⇓
The Pound dipped against the Dollar after a strong month in September, with Sterling falling by 0.4%. It has finally taken a step back after having reached its best level over the Buck since February 2022. This decline is attributed to traders ramping up bets on global rate cuts, leading to a slide in “gilt” yields. The U.K. 10-year government bond yields dropped by six basis points to 3.94%, demonstrating increased pessimism among business chiefs about the U.K.’s economic outlook. Looking ahead, the market is closely watching the Bank of England’s next meeting in November, where a rate cut is almost fully priced in.
MXN ⇓
The Mexican Peso is moving slightly in value, but banks in Mexico are closed today as Claudia Sheinbaum makes history being inaugurated as the first female president in the country’s history. Oath and ceremony will be followed by businesses and others preparing and adjusting to potential changes if her agenda is to put emphasis on eminent domain and controls over large industry. MXN will also be affected by Dollar volatility ahead of the November election here. Emerging markets will also be impacted by more news out of China and developments in the Middle East. Per the MSCI emerging Market Currency Index, all-time record can still be beat with a fresh new one.
