After coming under heavy pressure yesterday, the U.S. dollar is advancing this morning.
Overview
The safe-haven greenback pulled back from recent highs during yesterday’s session as American equities soared. The risk-on rally looks to be cooling off this morning, allowing the greenback to claw back some of its losses from the prior session.The economic docket is light today in the States, so expect the greenback to take its cues from European energy headlines and global equity markets. Earnings season will continue today. The dollar’s persistent strength is expected to hinder foreign revenue for U.S.-based companies. Existing home sales are due out at 10 a.m.
What to Watch Today…
- Existing Home Sales at 10 a.m.
Back to Back TOP Wins | #1 G10 Forecaster for Q1 2022
Bloomberg ranks Monex USA (formerly Tempus) as the top G10 Forecaster, NZD, CHF, AUD, MXN, and GBP! Learn More
EUR
The Euro gained yesterday as traders increased bets that the European Central Bank will become more aggressive in fighting inflation. The increasing interest rate differential between the ECB and the U.S. Fed has been the biggest driver behind the Euro’s recent demise against its American rival.The Euro is on the back foot this morning as the energy crisis is back in the headlines. The EU proposed that Europe cut its natural gas consumption by at least 15% over the next eight months. The move is defensive in case Russia cuts off its flow of natural gas over the winter months. EU President Von Der Leyen said that a full Russia gas cut of is a “likely scenario.”The European Central Bank will release its decision tomorrow morning. The official guidance is for a 25-basis point hike, but a few now expect the ECB to hike 50 basis points. Regardless, it will be the first interest rate hike in a decade.
CAD
The Canadian dollar is slipping against the U.S. dollar this morning following a report that showed Canadian consumer inflation rose at a slower pace than estimated. Consumer prices rose to 8.1% on an annualized basis, the highest level since 1983. However, the print was lower than the 8.4% estimated by economists.
The high inflation will likely keep the Bank of Canada on its policy tightening path. However, the print today may signal that inflation has begun to peak in Canada.
