Dollar Mixed; Commodities Continue to Rally

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Dollar Mixed; Commodities Continue to Rally

OCTOBER 25, 2021

The U.S. dollar is trading in a bit of a mixed direction this morning, gaining versus the Euro but falling further behind commodity-linked currencies. 

Overview

This morning’s docket showed more warning signs for the nation’s recovery.  The Chicago Fed national index slipped to -0.13 in September, down from an upwardly revised 0.29 in August.  A reading below 0.0 indicates below-trend growth in the national economy.  Later this morning, the Dallas Fed Manufacturing print for October will be released.

Earnings season continues with the five largest technology companies in the nation reporting this week, starting with Facebook today.  U.S. jobless claims and GDP on Thursday morning are the biggest risk events on this week’s agenda.

What to Watch Today…

  • Dallas Fed Manufacturing at 10:30 a.m.

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EUR  

The Euro is under pressure this morning and has fallen as much as half a percent following poor economic data.  German business confidence fell to a six-month low in October, likely due to supply chain issues gumming up the manufacturing-heavy economy.  The gauge dropped to 97.7, missing estimates of 98.0.  The print represents the fourth straight drop.

The European Central Bank will conclude its meeting on Thursday morning.  While no changes to interest rates are expected this week, we will be keeping a close eye for guidance on its pandemic bond-buying program.  The meeting comes as the Federal Reserve looks to remove stimulus later this year and the Bank of England may hike rates at their next meeting so a dovish outcome from the ECB would highlight a growing divergence in monetary policy.

CAD  

Does this sound familiar? Commodity-based currencies are rallying across the board this morning on higher energy prices.   West Texas Intermediate cruse rose 0.9% to over $84 a barrel while Brent crude rallied to $86 a barrel.  The latest push higher comes after Saudi Arabia said OPEC+ should maintain a “cautious” approach to managing global crude supplies.

The price of gold also rallied to over $1,800 an ounce.

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