After a rather unprecedented winning streak that brought the Dollar back to its strongest point since mid-July against most currencies, the Buck is facing a small correction this morning and is losing ground across the board
Overview
The fundamentals driving current USD pricing have not changed much, and we still see USD much stronger than it was even three weeks ago ahead of a slew of risk events next week and the week after. Treasury yields have rebounded a touch today after their biggest one-day slide since 1995, attempting to pare their massive selloff across all tenors.
The US data calendar did see some action this morning, and initial jobless claims surprised below expectations. Markets saw the possibility that weather disruptions from hurricanes Helene and Milton could push claims higher, but such fears did not materialize today, and this is helping to keep this morning’s Dollar decline muted. Continuing claims, however, did tick upward, not unexpectedly. We will see later this morning the preliminary PMI reading for the month of October, expected to come in steady with last month’s release.
Election headlines are still at the forefront of the US picture this morning, as polling remains functionally a dead heat between the two major party candidates. The rhetoric on both sides of the proverbial aisle is heating up, with Vice President Kamala Harris referring to former President Donald Trump as a “fascist,” though it’s unclear the material impact this may have on polling. National polling still gives a slight edge to Harris, but Trump has gained an edge in several key swing states that keeps the Electoral College picture very up in the air. With a Federal Reserve decision due out the day after election day, it’s quite possible the American public will not know who the next president is as Jerome Powell speaks, keeping risk levels high through the next two weeks.
What to Watch This Week…
- S&P Global Flash PMI, Thursday 9:45AM
- Durable Goods Orders, Friday 8:30AM
- Monex USA Online is always open
EUR ⇑
The single currency rebounded overnight against the Buck, clawing back a quarter of a percent on EURUSD at the open of US trading. Second-tier European PMIs are providing the boost this morning, showing that Germany’s preliminary reading in particular is facing less of a slowdown than expected in Q4. In all likelihood the European Central Bank will still be forced to continue its easing cycle at its next meeting in December, though, and markets see a decent chance the ECB will be forced into a 50 basis point cut as inflation and growth both continue to undershoot expectations.
JPY ⇑
Japanese Yen has finally found a foothold after several consecutive sessions of losses, gaining back at one point half a percent against USD. Japan’s finance chief overnight stated that he’s “raising the level of urgency” for monitoring the currency’s recent woes, and minister Katsunobu Kato warned that officials would be watching for speculative trading on USDJPY in particular. Such rhetoric is increasingly reminiscent of authorities’ moves in late spring and early summer to bolster the currency, but with a national election over the weekend, officials may be forced to wait to take action.
