Dollar Falls Versus All G10 Counterparts

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Dollar Falls Versus All G10 Counterparts

OCTOBER 19, 2021

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The U.S. dollar is selling off across the board this morning, as firmer risk appetite abroad and higher American equity futures damped demand for the safe-haven. 

Overview

A solid earnings season has allowed markets to flourish despite spotty fundamental data and the threats of inflation.  The Dollar Index fell 0.4% and is now at a one-month low. The dollar is also at its weakest level versus the Euro since September.

U.S. housing starts were reported this morning but didn’t move the needle.  Instead, we will keep an eye on the four Fed speakers on today’s docket. Markets will continue to gauge how the Federal Reserve is going to tight rope walk higher inflation pressures without greatly disrupting equity markets.  The central bank’s charge it to promote full employment and ensure price stability but you better bet they have an eye on equity indexes as well.

Earnings season continues as well with companies such as Netflix. Johnson & Johnson and United Airlines reporting results today.

What to Watch Today…

  • Four Fed speakers; earnings season continues 

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CAD  

Commodity-based currencies have been the biggest beneficiaries of the overnight move. New Zealand and Australian dollars rallied a percent against the U.S. dollar.  The Canadian dollar resumed its three-week rally against the U.S. dollar as well.  The price of WTI crude oil rose a percent, its fourth daily advance.

Bloomberg reports that the pop in oil comes after Russia signaled it won’t go out of its way to offer European consumers extra gas to ease the current energy crisis unless it gets regulatory approval to start shipments through the controversial Nord Stream 2 pipeline.  Risk-on trading and continued commodity price rally will keep the greenback under pressure versus these rivals.

GBP  

The British pound rose nearly a percent against the greenback and touched its strongest level since September 16th.  There was no fundamental data out of the U.K. to give the sterling a boost, rather just general dollar weakness.  Market participants have kept this weekend’s hawkish comments from Bank of England Governor Andrew Bailey in the back of their minds, likely adding to the sterling’s strength today.

Sterling experienced a sharp sell-off at the end of September, a move that looks to have been overdone.  Sterling has recouped most of those losses and is now within half a percent from its highs of late July.

U.K. consumer price index will be released tomorrow morning.

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