The U.S. Dollar is closing out the week with a slight gain and could potentially finish October with a 1.0% jump overall if it can sustain it for the remainder of the day.
Overview
Tariffs and central bank action defined the first month of the fourth quarter, which helped boost the Buck as the global growth narrative was impacted by friction between the world’s two largest economies. Suddenly, the two powers want to prevent doing further damage to one another and are looking for ways to remain friendly after imposing limits and duties on another. A story combining a “hawkish” Fed and better-than-expected economic headlines in the midst of a government shutdown are keeping FX flows tight while giving some benefit to the Dollar, for now.
Other market classes, especially equities, are dwindling as the enthusiasm behind more easing from central bankers all over is fading while investors are also questioning the sustainability of gains from the tech industry. Odds of the Fed cutting by another 25 basis points at their December 10th meeting stand at 60.0%, but perhaps once official data is available again, analysis can influence the likelihood that the Fed feels comfortable lowering borrowing costs. If the Buck can maintain buoyancy, October will mark the second month in 2025 after July that represented USD appreciation.
What to Watch This Week…
- Monex USA Online is always open
EUR ⇓
The Euro is down by 1.6% for the month after political turmoil and worrisome lack of progress in some member nations put a damper on Euro gains throughout the Summer. The shared currency is back to its lowest point since July but could start making a comeback based on recent good reports. No recessionary pressures and a confident European Central Bank may make this down moment very short-lived. With Gross Domestic Product for Q3 surprising but the Stoxx 600 Index having its fourth day of consecutive losses, the longest since July, makes for a volatile and interesting time for the common tender.
MXN ⇓
The Mexican Peso is facing a down month with a mix of trade anxiety and low productivity affecting the currency. It is moving near its weakest point since the second week of September. GDP numbers were disappointing, highlighting that a (-0.2%) contraction may be due to a disturbed commercial environment. With prices going up, central bankers from Banxico will have a tough time deciding if cuts could exacerbate price growth, but now with negative economic growth, the main issue will be to avoid staying too long in a period of “stagflation.”
