After six straight sessions in the green, the United States Dollar is a touch on the back foot this morning though trading against the G10 does remain relatively mixed
Overview
Risk sentiment took a bit of a hit overnight, but such a move is not flowing through to benefit the Dollar. US treasuries gained for the first time in five sessions, and Japanese Yen recovered some ground after last week’s slide, but the broad USD is fairly close to levels seen at yesterday’s close.
The Chinese economy reopened today after a week of holidays, to a rather lackluster performance, keeping risk trading on the back foot. Economic officials for the nation failed to keep investors engaged and stopped short of promising further economic stimulus that has fueled a substantial economic rally over the last few weeks. Though economists still deem it likely that more stimulus will come down the pipe, the timing of such a move is uncertain and as such APAC currencies and risk assets are taking a bit of a hit. A measure of Chinese equities in Hong Kong, while initially starting the session in positive territory, fell following the lack of an announcement and closed the session decidedly negative.
The data calendar around the world does remain quiet for today, but picks up some steam in the back half of this week. Starting with the release of FOMC minutes tomorrow, the US then sees CPI for September on Thursday morning. Expected to show a slight decline on a monthly basis, we don’t believe the release – save for a major surprise in either direction – will materially change USD’s fortunes this week, and the release of the Fed minutes is likely to make a larger impact on the Dollar.
What to Watch This Week…
- US FOMC Minutes, Wednesday 2PM
- US CPI, Thursday 8:30AM
- UK GDP, Friday
GBP ⇑
Pound Sterling, after a dismal few sessions last week, is recovering a small bit of ground this morning ahead of the release of quarterly UK GDP on Friday. A few market officials have attempted to somewhat walk back Governor Andrew Bailey’s very dovish statements last week, where he said that the Bank of England could stand to ease policy further faster. Strong retail sales data for the month of September, released this morning, is also buoying GBP. The figure showed that retail sales grew 2.0% year-over-year, outpacing GDP growth and giving the sliding currency a boost.
AUD ⇓
The Australian Dollar is the worst performer in the G10 this morning, following the decision by Chinese authorities to not announce further stimulus measures earlier this morning. AUD, at one point, slid nearly three quarters of a percent after a negative trading session yesterday as well, but has recovered some ground – still substantially below last week’s highs and even close yesterday. Sustained hawkish rhetoric from the Reserve Bank of Australia is likely keeping AUD somewhat afloat and stemming losses, following both the release of the RBA’s minutes and commentary from deputy governor Hauser that highlighted the stickiness of inflation in the nation.
