The U.S. Dollar is trading in steady ranges, coming down from a high this week that marks its strongest levels since July.
Overview
Much of the strengthening is due to economic indicators showing that America’s situation is far from a ‘soft landing.’ While less people claim jobless benefits and production continues to be positive as managers respond with optimism to surveys, it is becoming clear that the U.S. economy may not require stimulus via interest rate cuts. Markets have been desiring a “dovish” Fed and were rewarded with a 50-basis-point cut, but another decision like it seems unlikely anytime soon. There may not even be any more cuts for what is left of the year.
At the time of writing, Durable Goods Orders for September did not contract as forecast. Excluding Transportation, the figure was expected to come in at (-0.1%), but instead expanded by 0.4%. Later at 10AM, we will get the results of the University of Michigan Consumer Sentiment Survey.
Overall, it looks like the Fed is not going to satisfy those looking for lowered borrowing costs and this may affect funds that were intended to go from bonds into equities, estimated to be trillions parked because the Fed did not deliver the cuts. October has seen just two days of losses for the Buck, which thus far has managed to rise by 2.5% in the month.
What to Watch This Week…
- Monex USA Online is always open
EUR ⇓
The Euro remains weakened to its lowest point since early July as the expected European Central Bank interest rate cut has been followed by speculation that the Euro-zone truly needs a 50-basis-points cut in December. Economic figures have not been impressive with now fiscal concern in France causing some panic over long-term funding and credit stability. Germany has been stagnant and there is growing concern about the long-term effects of war in the Middle East as it can lead to precedented issues with many seeking refuge. The downfall of the shared currency has not been challenged for a little while as the currency has weakened by over 1.5% since the start of September
JPY ⇓
The Japanese Yen has dropped more aggressively, depreciating by over 2.7% since September as markets have received mixed signals about the future of monetary policy, which was supposed to tighten. Japan’s economy has not been stellar, but it has merited now having potential for the Bank of Japan to feel comfortable in raising borrowing costs, and the Prime Minister was looking to support those policies. However, there will be legislative elections on Sunday in which it is predicted that the ruling coalition that has been around since 2009, will not win enough support to remain in the current power-sharing agreement.
