US Dollar Down Slightly, Continuing the Week’s Downward Trend
The US dollar was modestly lower versus its major trading partners early on Friday, following a downward week trend. The US data schedule is lighter heading into the weekend, with the flash IHS Markit estimates for October manufacturing and nonmanufacturing conditions the only key releases scheduled for the day.
Federal Reserve Chairman Jerome Powell speaks to a conference of the Virtual Bank for International Settlements to finish off a busy week of Fed official appearances. The quiet period ahead of the Nov. 1-2 FOMC meeting begins on Saturday.
A quick summary of foreign exchange action heading into Friday shows that USD-CAD fell to 1.2328 from 1.237 at the Thursday US close, only slightly below the 1.234 level a day ago.
Canada reports retail sales Friday, which are expected to show a significant rebound after a decline in the previous month, a positive development ahead of next week’s Bank of Canada meeting. Analysts expect an asset purchase tapering announcement after the meeting.
USD-JPY slipped back below the 114 level after stronger Japanese inflation and manufacturing data than previous months were released on Friday.
The pair dipped to 113.8099 from 114.0067 at the Thursday US close and is now down from 114.0112 a day earlier and 114.3359 a week ago.
The Bank of Japan also meets next week, where no monetary changes are expected as the Japanese economic recovery continues to lag the rest of the major economies.
EUR-USD ticked up only slightly to 1.1643 from 1.1623 at the Thursday close, roughly unchanged from 1.1642 a day ago, as the preliminary data from IHS Markit came in below expectations, keeping the pair in its recent tight range.
The upward momentum of the pair seems to have stalled as other central banks such as the Bank of England and the Federal Reserve are well ahead of the European Central Bank in tightening monetary policy.
GBP-USD also moved up slightly to 1.3796 from 1.3793 at the Thursday US close, modestly below the 1.3809 level a day ago. UK data reported Friday were a mix, with retail sales weaker-than-expected, but the PMI manufacturing and services data stronger.
There is still an expectation that the Bank of England will raise interest rates at its meeting next month, the first among the G-7 countries. # US Dollar Down Slightly, Continuing the Week’s Downward Trend
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