Dollar Gains Versus EUR, GBP; Commodity Linked Currencies Rally

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Dollar Gains Versus EUR, GBP; Commodity Linked Currencies Rally

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The U.S. dollar, overall, was little changed against most of its counterparts after falling across the board yesterday. 

Overview

The greenback was able to sneak out small gains versus some of its rivals such as the Euro and British pound but continued to fall against commodity-linked currencies.  The greenback is now at the strongest level since 2017 versus the Japanese yen. The Dollar Index remains near a one-month low.

Most of the possible market-moving events are taking place outside of the U.S. today.  However, we will keep an eye on the latest U.S. crude oil inventories at 10:30 am. There is a slew of Fed speakers speaking at an event on racism and the economy which starts at noon.  The Fed’s Beige Book will be released at 2 p.m.

What to Watch Today…

  • Fed’s Beige Book at 2 p.m.

View Economic Calendar

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CAD  

Commodity-related currencies continue to crush the U.S. dollar this week.  Risk-sensitive Australian and New Zealand marched higher as global equities have ticked higher.

The Canadian dollar rose for a second day against the greenback despite a slip in the price of oil.  WTI fell over 1.0%, breaking a four-day streak.  The loonie is extending its gains in early trading after inflation data showed that the consumer price index rose 4.4% In September from a year earlier.  The print is above the 4.3% consensus of economists and the highest since February 2003.  The uptick in price pressures will put additional pressure on the Bank of Canada who has maintained that inflation will be short-lived.  BoC policymakers have said they will not raise rates until the second part of next year.  Could this data cause them to change their tone?

GBP  

After rallying to start the week, the British pound fell 0.3% overnight.  Data showed that U.K. consumer prices accelerated well past the Bank of England’s target last month.  CPI came in at 3.1%, slightly lower than the 3.2% predicted by economists.  This was the last piece of inflation data before the Bank of England meets on interest rates next month.  It is likely they will hike rates.

It is possible that traders are once again focusing on the rising Covid-19 rates in the United Kingdom. The recent surge in cases has put the U.K. behind a number of other European nations in both case rates and deaths.  The threat of another lockdown would have a devastating effect on the nation’s recovery which could be the reason we are seeing the sterling lose this morning.

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