After a slew of economic releases from around the world overnight, the United States Dollar is in divergent but overall slightly positive territory this morning against its G10 peers.
Overview
The Federal Reserve begins its two-day meeting today, with its decision on interest rates and subsequent press conference from Jerome Powell at 2 PM Eastern time tomorrow. At the forefront of domestic news today is, once again, the US Treasury, which said it expects to borrow $776 billion in Q4 of this year, less than last quarter and below expectations. Treasuries recovered, and the 10-year yield fell to 4.82% on the news, 20 points below its historic high above 5% last week and provided some downside for USD through the overnight session, though the Buck is recovering most of its losses this morning.
This downside, however, is limited, as news from around the world added some safe-haven demand for the Dollar. The Bank of Japan overnight did tweak its yield curve control policy, but not to the extent that traders either wanted or expected. Its muted move seems to be, to traders, “too little too late,” and JPY is down more than a percent against USD and EUR to open the day. China’s factory activity for the month of October also fell back into contractionary territory, adding to continued calls for government support for the world’s second-largest economy. The non-manufacturing PMI gauge also fell, though it just barely avoided a contraction. Eurozone GDP also posted a surprising contraction for the third quarter of this year, and regional CPI came in below expectations as well, fueling the fire of global sentiment.
Ahead of tomorrow’s Federal Reserve announcement, US equities are set to open close to flat this morning. Oil prices and gold are both trading a bit higher today as risk-off attitudes prevail amidst further doom and gloom.
What to Watch Today…
- Federal Reserve Policy Decision & Press Conference, Wednesday 2 PM
- Bank of England Policy Decision, Thursday 8 AM
- Monex USA Online is always open
CAD ⇓
Rising oil prices are no help for the Loonie this morning, losing nearly a quarter of a percent against USD. Canadian GDP today came in at a flat 0% for the month of August and 0.9% annualized, on expectations but below the prior reading. CAD has been the third-worth performer in the G10 for the month of October and has weakened against USD for the third straight month. After holding the interest rate steady at its meeting last week, the Bank of Canada is unlikely to raise rates any more, adding downside to the USDCAD pair.
GBP ⇓
After recovering some ground overnight as US treasury yields spiked back downward, Pound Sterling has slipped back into negative territory against USD ahead of both the Federal Reserve and Bank of England meetings this week. The UK Insolvency Service said this morning that there were 6,208 company failures in the third quarter of this year in England and Wales, up 10% from this point a year ago. This represents a further warning sign for a UK economy that has just barely avoided a recession up to this point.
