The U.S. Dollar is trading in stronger ranges, settling itself in fresh new highs not seen since end of October 2022
Overview
Uncertainty over the impact of the upcoming Trump administration strategies are keeping markets buoyant and traders guessing about chances for more inflationary pressures. This morning’s release of Producer Price Index numbers from October gave additional evidence of price-growth remaining an issue. PPI for the year stands at an average of 2.4% from 2.3% after the monthly advance was slightly higher than expected 0.3% vs. 0.2%.
Markets are still looking for “Trump trades” to jump onto such as Bitcoin which has doubled in value this year and outperforming stocks. Investors are behaving with hopes that Trump policies will indeed be market friendly. Later today around 3PM, we will get a chance to hear thoughts from Fed Chairman Jerome Powell as he addresses the press at a Dallas Fed event. Tomorrow, we close out the week with U.S. Retail Sales, Industrial Production and regional NY data in the form of Empire Manufacturing.
What to Watch This Week…
- US Retail Sales on Friday
- Powell comments around 3PM Thursday
- Monex USA Online is always open
GBP ⇓
Sterling has fallen in value, dropping by 2.4% thus far in the month of November as the GBP/USD pair has sunk to its lowest point since July. As chances of Fed cuts have started to come down, the Pound has naturally diminished in strength especially after last week the Bank of England showed commitment to a stimulus-driven mentality. Slashing borrowing costs on the other side of the pond may also prove difficult with inflation plaguing the Bank of England’s models, but there may be enough economic stagnation that it forces the BOE to stay loose. We will get a chance to judge the situation from the perspective of Industrial Production figures for September out tomorrow.
EUR ⇓
The Euro has been losing ground all week, nestling itself around its weakest levels against the dollar in a little over a year. Data released in the overnight session did not do much to help ease any of the pain. Third-quarter growth expanded as expected with Gross Domestic Product registering a 0.4% move as estimated. The annual GDP average is at 0.9% after the Euro-zone avoided recessionary fears that had been building since end of last year. Nevertheless, Industrial Production has taken a hit with September showing a deeper contraction than thought at (-2.0%) vs. (-1.4%) while the prior month’s original reading was revised downward. As European leaders face headwinds, expect these numbers to perhaps continue to disappoint and test the shared currency’s stability in the next couple of months.
