Dollar Softens on Low Inflation; Krona Reaches 17-Year Low

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Dollar Softens on Low Inflation; Krona Reaches 17-Year Low

OCTOBER 08, 2019

The dollar held familiar ranges against most of its rivals overnight but lost ground against the Kiwi, Aussie, and Japanese yen.

Overview

The greenback has softened more in early trading after the producer price index showed producer inflation sunk by the most since 2015.  Excluding food and energy, prices decreased 0.3% in September on a month over month basis which is the biggest monthly drop in four years.  Subdued inflation will allow the Fed to continue to cut rates if it deems necessary.  Fed Fund Futures show a 77% chance of a rate cut at the October 30th meeting.  The chances are up from a 60% chance a week ago.

There are also a number of Fed speakers that will be worth monitoring this afternoon.  Fed chief Powell will be speaking at a conference in Denver at 2:30 p.m.  The Fed’s Evans and Kashkari will also be speaking in Chicago and St. Cloud, respectively.  The minutes for the Federal Reserve’s latest meeting will be released tomorrow afternoon.

What to Watch Today…

  • Powell Speaks in Denver at 2:30 Eastern

A complete Economic Calendar can be found here.

NZD

The New Zealand dollar jumped half a percent after the nation’s budget surplus widened.  The Australian dollar was also able to gain modestly too after reaching a 10-year low last week.   The Antipodean pair also found support as hopes for a productive trade talk session in DC later this week ticked higher.  We are not sold, yet.

SEK

The Swedish krona continued its long losing streak against the greenback and touched its weakest level in 17 years yesterday.  Sweden’s export-driven economy has been hit hard by the trade war which has hampered global trade.  Riksbank, Sweden’s central bank, has continued to cut interest rates to record lows, putting added pressure on the krona.

The krona saw minor relief overnight following a decent production print but overall the SEK is over 10% weaker against its American counterpart so far in 2019.

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