The United States Dollar is in the territory of a mild selloff this morning but still well within recent ranges across the G10.
Overview
Risk-positive trading is making a return to the forefront of the market after Israel launched its ground invasion into Gaza over the weekend but seemed to exercise more restraint than the military and government had previously vowed. The Israeli Shekel is gaining after the weekend after taking heavy losses through the month but still remains near 11-year lows. Haven currencies like USD, JPY, and CHF are falling a bit today. US equities are set to open higher this morning as well.
US markets have quite the busy week ahead, with the Federal Reserve’s policy decision Wednesday at 2 PM followed by a press conference from Jerome Powell. Though a hold of interest rates this week is all but a done deal, traders will be – as per usual – watching Powell’s words very closely to determine if the central bank will, in fact, institute a final rate hike this year in December. The Fed has attempted to adjust its messaging recently to account for historically high treasury yields, saying these types of returns as of late could take the place of further interest rate tightening. Also due out Wednesday is the US Treasury’s new borrowing plan, which will lay out the extent to which the government needs to ramp up bond sales in the face of a rapidly widening deficit. Yields are currently near their highest levels since before the global financial crisis, a warning sign for the US economy as well as quite costly for the government.
Central bank meetings around the world continue as well this week, with the Bank of Japan overnight tonight and the Bank of England Thursday morning. Though no central bank is expected to raise interest rates again this go-around, their statements on the overall health of their economies will be of utmost importance for FX pricing through the remainder of this year.
What to Watch Today…
- Bank of Japan Policy Decision, Tuesday
- Eurozone Q3 GDP, Tuesday
- Federal Reserve Policy Decision & Press Conference, Wednesday 2 PM
- Bank of England Policy Decision, Thursday 8 AM
- Monex USA Online is always open
EUR ⇑
The single currency is recovering ground against the Dollar this morning, though still within the same trading range of the last month. German GDP released this morning showed the economy contracted less than expected on an annual basis. Though definitely not a “good” data point, as an economy in contractionary territory is never welcome, traders are looking at the silver lining of an expectations beat and giving EUR a boost today.
AUD ⇑
The Australian Dollar is the biggest winner on the G10 board this morning after retail sales came out stronger than expected. This is adjusting the calculus of the Reserve Bank of Australia moving forward, as it seems the economy down under may be better-suited to tolerate further interest rate hikes than that of many of its peers. The RBA meets next week, and traders have the odds of a 25-point hike currently at a coin flip.
