The U.S. Dollar continues to lose ground across the board as markets continue to enjoy some good earnings reports and speculation that the Federal Reserve may regress a bit on their monetary tightening.
Overview
Recent evidence from the Purchasing Managers Index and other data points has highlighted how the economy is no longer stubbornly growing. To some extent, the Federal Reserve’s beliefs that the economy could withstand multiple rounds of interest rate hikes and quantitative tightening have manifested themselves. Still, it is now time to think about reining back some of the measures, as 2023 looks vulnerable to low growth.On the other half of the world, markets in Asia flourished following a jump for U.S.-listed Chinese companies of 5.0%. The climb represents a reprieve considering the recent decisions by the White House to counter Chinese tech advancements and influence by putting limits on the semiconductor and chip tech trade. Also, much of the world was surprised at Xi Jinping’s strong overtake of his party and China’s leadership, making companies like Apple nervous about future decisions.Per the Bloomberg Dollar Spot Index, this is the weakest buck since the start of the month. A deluge of data tomorrow will be released, including Gross Domestic Product figures and Durable Goods Orders for September.
What to Watch Today…
- No major economic events are scheduled for today
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EUR ⇑
The Euro jumped to its best levels since October started as global markets expect hawkish action and commentary from the European Central Bank policy meeting scheduled for tomorrow. As we start our Thursday, we will listen to Christine Lagarde, ECB President, as she explains the official mindset going into winter.
A round of 75-basis-points is expected, so anything less or more will be a surprise. While the Euro has room to grow, we also are monitoring talks in Italy about the desire to reform some of what the EU means to the country. Stability is key now more than ever for Euro to have a chance of recovering what it has lost these past months and years.
GBP ⇑
Sterling is up to its strongest level over the greenback since mid-September as introducing Rishi Sunak as the new Prime Minister brings a new sense of direction to U.K. politics. While facing some scrutiny over his wealth, the new PM is hoping to use his money smarts to guide the country in a clearer direction after a tumultuous turn to Truss following the controversial end to Boris Johnson.
Overall, there is the belief that Rishi can get a budget right and put the government in a position to collect revenue. Tax collection suffered a blow following stimulus spending to cushion the tremendous rise in temporary unemployment throughout the pandemic.
