The U.S. Dollar is trading in weaker ranges as the global equity sell-off hit the brakes.
Overview
Although investors and traders remain cautious about what is left for the remainder of the year in terms of signs of struggling growth, the buck is starting to slip away from its records. There is a very elevated risk of price swings, the highest level of volatility since the pandemic began. Economists are unable to foresee much in terms of the future with so many possible scenarios that could unfold.Fed officials have reiterated that their way of thinking and course of action when it comes to contractionary monetary policy will remain until there are clear signs of price improvements and consumption. Meanwhile in Europe, the energy crisis has added another challenge with alleged sabotage of the Nord Stream pipeline that still delivers, in very limited form, natural gas to European nations from Russian fossil fuels. Per earlier data released domestically, U.S. Durable Goods Orders contracted by (-0.2%). We will see how long this negative trend lasts for the buck as we enter the last days of Q3.
What to Watch Today…
- No major economic events are scheduled for today
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EUR ⇑
The Euro has stopped sinking following days of dropping to one of its weakest points since it was introduced as a shared regional tender. News out of Europe continues to focus on what may be the economic plan out of Italy with a new government coalition under Prime Minister Giorgia Meloni.
Yesterday, the European Central Bank’s Chairwoman Christine Lagarde explained that officials would consider rounds of quantitative tightening (countering QE -easing) once they have consensus on interest-rate normalization. We think now that the Euro will eventually climb back up, but our outlooks need some revising after the damage uncertainty and war have done to the Euro-zone.
GBP ⇑
The Pound is trying to recover after falling to a record low across trading sessions because of the negative reaction to the new administration’s spending plans and lowering of taxes. Bonds and stock markets for the U.K. have shed $500.0BN in value since the start of Liz Truss’s government.
While the economic strategy remains to be fully implemented, authority figures such as Chancellor of the Exchequer Kwasi Kwarteng have vowed to put all their faith in the plans for growth ahead. We do not see an end to the “Dollar Doom Loop” quite yet, but there is confidence out there.
