The U.S. Dollar’s momentum came to a halt overnight following a week characterized by dovish stances from the world’s most influential central banks.
Overview
Expectations for a hawkish Fed or an interest-hike determined Bank of England were not met as the global situation gets more complicated headed into the colder months.While concerns over the Delta variant were fading off, fresh new concerns over outbreaks in Europe as well as China have many wondering how much more of a battle we will need to prepare for with COVID still keeping certain restrictions from the economy being at full throttle. Greenback strengthening as a safe-haven has been the trend, but consistency has not been much of a thing this year.Regardless of some medical negativity, markets this morning seem glad to see a report of a record monthly trade surplus for October, a sign of support for the Chinese economy that had been missing significantly in recent months. On our front, Congress passed the biggest U.S. infrastructure bill in American history, which many believe is the main ingredient needed to truly spark significant economic growth.
As far as speculation over Fed action, Wednesday’s Consumer Price Index figures gauging inflationary pressures will be closely watched, because if very low, it could mean the Fed extending its expansionary policy by accelerating bond purchases.
What to Watch Today…
- No major economic events scheduled for today
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EUR
The Euro is mounting a bit of a comeback this morning based on the positive developments in China by seeing trading activity picking up. Additionally, the situation in Europe will watch for developments in the oil market as Russia has pledged to supply the continent with more gas, fending off criticism of holding up shipments to very modest increases to Germany and the Euro-zone.
Prices have gone up, yet the European Central Bank has said that the high inflation of now will cease in 2022. For now, good market headlines could give room for Euro and others to pick up losses in value.
GBP
Sterling has moved up a little from where it was Friday following a major decline based on a less confident Bank of England than traders forecast. Refusal to hike interest rates came with an explanation from Governor Andrew Bailey that bets for hikes were out of synch with the BOE message.
Economically, Britain has struggled with the pandemic woes exacerbating pre-pandemic issues naturally sprung from the disorganized nature of Brexit. We shall see how much more Pound can improve, but it has little merit.
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