The U.S. Dollar is on a weakening trend to start the morning as equity markets enjoy the fact that central bankers on both sides of the Atlantic are not determined to tighten.
Overview
While recent readings on inflationary growth suggest pain across sectors, neither the Federal Reserve nor the European Central Bank seems convinced these are times to consider the return of interest rate hikes. Furthermore, earnings reports have impressed here and there, thus giving reason to a more optimistic growth outlook to 2022.
The re-strengthening of other currencies against the dollar will take a whole lot more than that since the buck has established itself highly valuable from a more consistent economic picture since the second half of the year began.Oil prices are declining as the potential for tapping strategic reserves in the U.S. increases. In Europe, supply issues are trying to be worked out via Russia’s expansion of an oil pipeline that is projected to get a much-needed German approval. We shall see how commodities, in general, fluctuate as we close the year and if it sparks anything special for petro-currencies. Copper fell the most in five weeks on speculation that demand for commodities could wane into next year. We get to see Purchasing Managers’ data figures for the U.S. to close out the week tomorrow.
What to Watch Today…
- No major economic events scheduled for today
WOW, IT’S A ‘FOUR-PEAT’ | Top MXN Forecaster for Last 4 Quarters
Bloomberg ranks Monex for MXN, G10 Currencies, and NZD! Learn More
EUR
The Euro remains around its weakest levels in 16 months as the worrisome situation in Europe continues. Increased attention to COVID outbreaks has deviated European leadership from the growth path their recovery from the pandemic had them on. Instead, the return of medical concerns and subsequent lockdowns is threatening to put the economy on a recessionary track.
Furthermore, markets seem convinced now that the ECB will not have the will to hike interest rates until 2023, thus causing a lot of bets on hikes to be called off by traders. An impressive round of indicators that negate a dark tale could spark some return to gains, but at the moment all factors are playing to keep Euro sunk at over year-and-a-half lows.
GBP
Sterling is rising based on impressive Consumer Price Index growth for October and consequentially a higher number of bets that the December 16th Bank of England meeting will result in a hike. Unlike the Fed and the ECB, traders perceive more of a need from the BOE and the rise in prices seems to suggest members of the Monetary Policy Committee will consider it enough for an uptick.
We doubt it based on the hesitation from Governor Andrew Bailey. Additionally, there seems to be good news brewing for better trade terms post-Brexit as the U.K. and the EU keep on ironing a variety of matters, but looking to mend the relationship.
Ready to spin the currency market moves in your favor?
Discover HOW WE Can HELP You SEND or RECEIVE PAYMENTS
