Dollar Rises Ahead of US Fed Jerome Powell Speech
The US dollar rose against its major trading partners early Thursday ahead of the release of weekly jobless claims data and producer prices data for October. The markets prepare for an appearance by Federal Reserve Chairman Jerome Powell.
Powell will be part of a discussion on the economic outlook but is likely to be asked about the independence of the Fed, a topic addressed at length in a speech earlier Thursday by Fed Governor Adriana Kugler, who said that the studies show a link between greater central bank independence and lower inflation and better economic outcomes.
Markets were quick to buy USD after a minor correction as US CPI was released yesterday, ING said in a note. Analysts noted that the move might reflect expectations for the coming year, as a USD-positive policy mix under Trump is likely to drive sustained bullishness for the dollar.
In the near term, the positioning picture points to a deeper USD correction, but that may also be short-lived. “Despite our view that the dollar will stay strong throughout next year, the very short-term picture still looks a bit more nuanced as long dollar positioning is starting to look quite stretched and a wider (albeit not long-lived) dollar correction could be on the cards”, ING wrote.
A quick summary of foreign exchange activity heading into Thursday showed that USDEUR fell to 1.0527 from 1.0562 at the Wednesday US close and 1.0620 at the same time Wednesday morning. Eurozone employment growth in Q3 was in line with the previous quarter, as was gross domestic product growth, according to data released earlier Wednesday.
European Central Bank policy board member Isabel Schnabel is due to speak Thursday followed by ECB President Christine Lagarde. The next European Central Bank meeting is scheduled for Dec. 12.
GBPUSD fell to 1.2656 from 1.2703 at the Wednesday US close and 1.2755 at the same time Wednesday morning. UK consumer sentiment fell slightly in November according to data released earlier Thursday.
USDJPY rose to 155.9430 from 155.5954 at the Wednesday US close and 154.8289 at the same time Wednesday morning. There were no Japanese data released earlier Thursday, but Japanese GDP data for Q3 are due to be released Thursday evening in US time. The next Bank of Japan meeting is scheduled for Dec. 18-19.
USDCAD rose to 1.4007 from 1.4000 at the Wednesday US close and 1.3952 at the same time Wednesday morning. Canadian new motor vehicle sales data for September are due to be released.. The next Bank of Canada meeting is scheduled for Dec. 11. #Dollar Rises Ahead of US Fed Jerome Powell Speech Fiscal Deficit to Rise over Oil Production Limit as NASS Raised Budget
