Dollar Slips; Commodity Currencies Rise

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Dollar Slips; Commodity Currencies Rise

OCTOBER 04, 2021

The U.S. dollar starts the week under pressure against most of its G10 counterparts, with notable weakness against its commodity-based counterparts. 

Overview

Indeed, commodities from iron ore to energy are up to start the week.

We will continue to keep a close eye on Washington.  Last week, Congress passed a nine-week spending bill to avert a government shutdown.  However, the bill did not include an increase in the debt ceiling.  U.S. Treasury Secretary Janet Yellen has set a dealing of October 18th.  The U.S. could exhaust its ability to borrow money by the end of this month, creating a risk for sentiment and potentially an opportunity for the greenback to weaken significantly.  President Joe Biden will be in Congress today to try to build consensus.

There is a ton of data on this week’s docket.  Later this morning, durable goods and U.S. factory orders will cross the wire at 10 a.m. The biggest risk event on the week’s docket will be Friday Non-Farm payrolls.  St. Louis Fed chief Bullard is the only Fed speaker on today’s schedule.

What to Watch Today…

  • Durable Goods orders at 10 a.m.

View Economic Calendar

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GBP 

The British pound is up for the third straight day, adding 0.4% to the rally enjoyed at the end of last week.  Volatility in GBP/USD is now at a five-month high as half a percentage point swings have become the new normal.  Traders may be looking ahead to the Bank of England’s next meeting in November as the central bank tries to tackle rising inflation, especially in the energy sector.

This is a light week for British economic data, so GBP/USD is likely to take its cues from developments on this side of the pond.

CAD 

The Canadian dollar found support and gained 0.3% versus the U.S. dollar as the price of oil rebounded from Friday’s losses.  The loonie is up three consecutive days against the greenback.

Oil cartel OPEC+ will meet virtually today in the midst of a global energy crunch, especially in Europe. Most expect that OPEC+ will increase production by 400K barrels a day. Despite the uptick in production expected prices for oil are near multi-year highs.

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