Dollar Slightly Weaker Again as Stocks Continue to Rise

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Dollar Slightly Weaker Again as Stocks Continue to Rise

The U.S. dollar is modestly weaker again this morning as the global risk rally continues.

Overview

European stocks rose and American shares are higher again this morning mostly on optimism that lawmakers will reach a stimulus deal.  Despite President Trump’s tweet to the contrary on Tuesday, Treasury Secretary Mnuchin and Speaker Pelosi remain in contact about a potential deal.  The President added to the optimism today by saying talks are starting to be “very productive.”

A growing chorus of analysts is also pointing towards the increasing likelihood that Joe Biden will win the Presidency and that the results will be clear on election night.  The lack of a protracted election fight and weeks of ballot counting, or recounts will limit volatility and boost risk.  It would also weigh on the greenback.  Election day is 26 days away.

Minutes from the Federal Reserve’s last meeting did little to move markets yesterday afternoon.  The central bank continues to plead to Congress their view that massive fiscal stimulus is warranted.  There is a slew of Fed speakers on today’s docket and they are likely to continue to sing the familiar tune.

This morning’s economic docket showed the American labor market is still in peril.  Initial jobless claims registered at 840K, slightly more than expected but 9K better than last week.  Last week’s claims were upwardly revised.  Continuing claims remain near 11 million Americans receiving jobless benefits.  The silver lining is that the print is down from the nearly 12 million last week.

What to Watch Today…

  • No major events scheduled for today

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October Monthly Outlook

CAD  

The Canadian dollar and other commodity-based currencies rose overnight, boosted by rising commodity prices.  Oil ticked higher as Hurricane Delta continues to threaten oil output in the Gulf of Mexico.  Bank of Canada Governor Riff Macklem is slated to speak this morning.

The Australian dollar and the Norwegian krone lead gains among commodity-based currencies.

GBP  

The sterling initially continued its recent march higher overnight but has since given back those gains.  GBP/USD is essentially unchanged from yesterday’s close.  Some analysts have pointed toward speculation a Brexit will be completed by next week.  We aren’t so sure.

Just yesterday the U.K. announced plans to quit Brexit talks if no clear deal is in sight next week.  While the statement is surely a negotiating tactic, the U.K. risks raising new tensions.  Indeed, EU officials responded by saying they won’t be pressured into making concessions and are prepared to call the U.K.’s bluff.  The clock is ticking and the next 7 days should be volatile.

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