The U.S. Dollar is trading in slightly weaker ranges as markets react to the shock this morning coming from the U.K., where Prime Minister Liz Truss has resigned.
Overview
The heavily criticized administration put together an agenda that caused a very negative reaction across markets that perceived the U.K.’s economy as one with unprecedented instability and uncertainty. Other than the major breaking news, stronger-than-expected earnings from big firms in transport and communications have improved the outlook for equities, that is translating into some risk appetite. Earlier, the Philadelphia Fed Business Outlook for October came in more negative than foreseen, while Initial Jobless Claims came in lower, suggesting not much has changed in labor. We shall see how much impact today’s resignation plays into FX flows and if any more surprises come down the line.
What to Watch Today…
- No major economic events are scheduled for today
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EUR ⇑
The Euro remains fragile as the energy crisis remains the dark cloud over anything related to economic growth. Nevertheless, leadership is looking for alternatives as they continue to prepare for what could be the most challenging winter in seven decades. Brazil is set to export ethanol while the EU continues to work closely with the Biden administration and Canada to also supply with fuels.
Next week, the European Central Bank will hope to hike interest rates which could just give Euro a further boost.
GBP ⇑
The Pound has been all over the place as it recovered from its weakest point reached in September but now seems to be on a positive trend. Liz Truss represented an undesirable change to economic planning during a very stressful time for the country in many economic and social aspects. As she departs, voices are becoming louder about the need to cooperate and get closer to mainland Europe, particularly to mend shattered lines of communication as well as business.
We do not know yet any details on succession, but Conservative Tory members seem to have an alternative already in mind and hope to prevent a call for general elections.
