The U.S. Dollar is slightly stronger today, albeit modestly. Indeed, you would be forgiven for not noticing much change at all.
Overview
Risk appetite is weaker today as fighting between Russia and Ukraine intensified. There is nothing on the economic docket that is likely to change the mood today. However, Cleveland Fed President Loretta Mester will speak at The Economic Club of New York at noon.
The largest risk event on this week’s calendar is Thursday’s consumer price data. Bloomberg describes the mood as “fragile” ahead of the inflation print that may solidify the case for a 75-basis point interest rate hike when the Fed next meets on November 2nd. A higher-than-expected reading is likely to be dollar positive as it will increase bets for more interest hikes. A softer reading could cause the greenback to weaken.
What to Watch Today…
- No major economic events are scheduled for today
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EUR ⇑
The Euro gained modestly against the U.S. dollar overnight but remains susceptible to the European energy crisis and increased fighting between Russia and Ukraine. The intensifying bombing over the weekend and yesterday as markets on high alert. While much of the geopolitical tensions are priced into the historically weak Euro, more downside could materialize if the multiple crises worsen. The recent calm in EUR/USD is likely to be short-lived.
GBP ⇑
The British pound is up a touch against the U.S. dollar overnight, but the sterling is still down 0.5% over the past three days. The Bank of England is stepping up its efforts to backstop the U.K. bond market. The BoE announced that it was adding inflation-lined gilts to the previously announced long-dated bonds. Bank of England Governor Andrew Bailey speaks this afternoon in Washington DC and market participants will be looking for clues for what the busy central bank is planning next.
