The U.S. Dollar is trading in mostly familiar ranges to close out an eventful week with a primary focus on the geopolitical issues that have developed.
Overview
As of right now, the Buck could escape losses for the week. Additionally, yesterday’s statements during an interview at the Economic Club of New York by Fed Chairman Jerome Powell suggested that the next meetings may conclude in pauses, but that there is still plenty of inflation to need to keep hikes of interest rates as a possible tool in the meetings for next year. The chances of another interest increment of 25 basis points stand at 20.0%. Caution from the Fed is the name of the game.
Tensions and adjustments to the crisis that is occurring in the Middle East are making for difficult and volatile markets to navigate. While it is usual for the Buck to rise as a natural safe haven to conflicts far from American shores, there is a lot hitting commodity as well as equity markets that may alleviate that flight to safety.
Japan’s inflationary growth based on the Consumer Price Index came in slightly better than expected when excluding food costs for September, and China is looking to fix its Housing sector tycoon problems and adding to lending facilities. Markets cannot ignore all that is going on, but with a tilt towards aid to Gaza and the potential for a diplomatic solution, do not be surprised if there is resilience and strange swings. Exacerbation of the conflict can only add to uncertainty and puzzling moves.
What to Watch Today…
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EUR ⇑
The Euro is likely to close the week with a half-percent gain for the week after inflationary data suggested ongoing expansion in price growth, making it likely that the European Central Bank can stay hawkish for longer than economists estimated. Recent runs of indicators show that the gloom once predicted has not materialized, yet other risk items have arisen. Purchasing Managers Index figures for October next week could provide evidence of no drag if there are expansionary readings. We will get the first reading of third-quarter GDP data on the last day of the month.
GBP ⇓
The Pound tumbled overnight following the release of poor Retail Sales for September, revealing a deeper contraction than what was expected. The yearly average now at (-1.0%) instead of (-0.2%) makes it likely that the Bank of England will remain careful, perhaps hesitant to raise interest rates again. We shall see what else is coming our way, but we are hoping for less chaos and work toward a resolution.
