Dollar Heads for Worst Month in Two Years; Nationals Win World Series

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Dollar Heads for Worst Month in Two Years; Nationals Win World Series

OCTOBER 31, 2019

The U.S. dollar seesawed following the Federal Reserves expected decision to cut interest rates for a third time.

Overview

However, the greenback lost ground overnight and remains under pressure this morning.  Indeed, the Bloomberg Dollar Spot Index is headed for its worst month since January 2018.

The dollar’s woes were briefly put on hold after reports broke that Chinese officials doubted the U.S. and China will establish a long-term, comprehensive deal.  Nevertheless, the “phase one” agreement seems to be moving forward.

Yesterday’s fundamental data beat market expectations but showed general slowing, a sentiment which was echoed by the Federal Reserve in the afternoon.   This morning’s the PCE deflator showed that inflation remains well below the Fed’s target, which will also help justify their rate cut.  Separate reports showed that personal income and spending met expectations.  Non-farm payrolls are due out tomorrow morning.

What to Watch Today…

  • No major events scheduled for today.

Complete Economic Calendar can be found here.

JPY

The Japanese yen gained and reached a one-week high versus the dollar. While the safe-haven yen was buoyed by general risk-off trading sentiment and after North Korea launched at least two unidentified projectiles off its coast.

The Bank of Japan left its current policy in place overnight but changed the wording on its policy pledge.  The new verbiage indicates the possibility that rates could go lower in the future.

GBP

The British pound ticked higher against the U.S. dollar; which is likely a sign of more dollar weakness, than sterling strength.  Recent British economic data showed more signs that the uncertainty surrounding the December election and Brexit, in general, is taking its toll on the economy.  Now traders will try their hand at reading polls for an indication of how the December vote will shake out.  A report overnight showed from the Telegraph painted a stronger path for the Conservatives to pick up seats, which would allow Prime Minister Boris Johnson to pass his Brexit package.  Time will tell.

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