US Dollar Falls Ahead of Fed Appearances
The US dollar fell against its major trading partners early Friday before the release of September home building data, and ahead of Fed appearance.
Above-consensus US retail sales and a dovish cut by the European Central Bank (ECB) are adding fuel to the dollar rally, ING analyst Francesco Pesole said in a note, adding that USD/JPY above 150 will retest Japanese officials’ patience, while cable’s relative resilience may not last long.
Today, EUR/USD downside risks extend to 1.07 in the near term when adding potential defensive positioning ahead of the US election. US retail sales came in strong yesterday, and the timing of their release (15 minutes after the European Central Bank cut) worked perfectly to favour another leg higher in the dollar, according to ING.
“USD/JPY finally made the seemingly inevitable break above 150”, Pesole said, adding that markets should be more attentive to currency comments than in previous JPY selloffs given the success of the latest round of Bank of Japan FX intervention.
Analyst said unless markets regain some confidence in Fed cuts, the dollar will hardly face downward corrections in the near term. The risk now is that markets might actually price out one cut in either November or December should core PCE and above all October jobs figures come in a bit hotter.
A quick summary of foreign exchange activity heading into Friday showed that USDEUR rose to 1.0847 from 1.0828 at the Thursday US close but was below a level of 1.0861 before the European Central Bank cut its target rate by 25 basis points for the second meeting in a row, as expected, suggesting that slowing growth is a greater concern for the central bank.
The next ECB meeting is scheduled for Dec. 12. The Eurozone current account surplus narrowed in August while construction output rose only slightly in the same month, data released earlier Friday showed. GBPUSD rose to 1.3048 from 1.3013 at the Thursday US close and 1.3009 at the same time Thursday morning.
UK retail sales rose unexpectedly in September, though at a slower monthly pace than in the previous month, data released overnight showed. The next Bank of England meeting is scheduled for Nov. 7.
USDJPY fell to 149.9046 from 150.2221 at the Thursday US close but was above a level of 149.6035 at the same time Thursday morning. Japanese consumer prices declined in September, pulling down the year-over-year rate, data released overnight showed. The next Bank of Japan meeting is scheduled for Oct. 30-31.
USDCAD fell to 1.3792 from 1.3799 at Thursday US close but was above a level of 1.3779 at the same time Thursday morning. There are no Canadian data on Friday’s schedule. The next Bank of Canada meeting is scheduled for Oct. 23. #US Dollar Falls Ahead of Fed Appearances Alleged Defamation: DSS files N5.5bn Suit Against SERAP
