The U.S. Dollar is weaker against most of its counterparts this morning as global risk appetite looks to extend yesterday’s gains.
Overview
After strong gains yesterday, American shares look to continue their momentum today. Nasdaq future and S&P futures are up 2.1% and 1.7%, respectively. Weak manufacturing data yesterday helped kick off bets that the Federal Reserve will slow its aggressive approach to future rates. However, the Fed has yet to change its tone and continues to double down on its intention to fight inflation even if it causes a contraction.Factory orders and durable goods orders will highlight the economic docket today. JOLTS Job openings also warrant a watchful eye. All three releases are scheduled for 10 a.m. EST.There are five different Fed speakers on today’s docket. It is unlikely that we will see policymakers pivot from their aggressive stance toward future policy.
What to Watch Today…
- No major economic events are scheduled for today
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AUD ⇑
The Aussie Dollar fell nearly a full percent against the dollar after the Reserve Bank of Australia surprised markets and only raised interest rates by 25 basis points. Prior to the decision, only a quarter of economists surveyed expected the RBA to hike only 25 basis points. RBA Governor Philip Lowe stated that “the cash rate has increased substantially in a short period of time.” The comment sparked speculation that the central bank is losing its appetite for higher rates. Will other central banks follow suit? In the meantime, the interest rate differential between Australia and some of its counterparts widened, weakening the Aussie.The New Zealand dollar also fell about half a percent, pulled down by the Aussie dollar.
GBP ⇑
The Pound has regained value following the government’s inability to keep its controversial agenda with tax cuts and other items being shelved. Nevertheless, there are ongoing concerns about the budget’s ability to aid the economy and Prime Minister Liz Truss may disagree with others about welfare paychecks keeping up with inflation for recipients.A complicated situation is brewing that may be fertile ground for the opposition to work towards elections and a change of the guard. Recent polls suggest that the Labour Party can bring a challenge to the Tories, who have been running things the success of the Brexit referendum in 2016. Any more turbulence could prevent further momentum for Sterling.
