US Dollar Rises Ahead of Inflation, Fed Appearances
Post election trading pattern saw the US dollar strengthening against its major trading partners in the forex markets early Tuesday ahead of the release of consumer sentiment reading, the first for November, and New York Federal Reserve’s inflation expectations report for October.
As the dust settles after last week’s US election results, global markets are settling into core trades of a firmer dollar, higher US equities and higher terminal rate from the Fed. Importantly in the FX market, traded volatility is picking up, suggesting active engagement in this dollar rally, ING said in a note.
Earlier Tuesday, the National Federation of Independent Business reported that small business sentiment improved in October, reflecting improvements in almost all of the index components.
However, the two biggest gains were in the outlooks for economic improvement and sales, both of which still indicated more pessimism than optimism and the uncertainty index rose to its highest level on record.
Fed officials are back on the speaking circuit Tuesday, starting with Fed Governor Christopher Waller and followed by Richmond Fed President Tom Barkin.
A quick summary of foreign exchange activity heading into Tuesday showed that USDEUR fell to 1.0615 from 1.0656 at the Monday US close and 1.0663 at the same time Monday morning.
Eurozone economic sentiment fell unexpectedly in November according to data released earlier Tuesday. The next European Central Bank meeting is scheduled for Dec. 12. GBPUSD fell to 1.2822 from 1.2867 at the Monday US close and 1.2888 at the same time Monday morning.
UK earnings growth accelerated in September while jobless claims and the unemployment rate both increased in the same month. Bank of England Chief Economist Huw Pill said that the data show UK inflation pressures remain elevated, according to Reuters. The next Bank of England meeting is scheduled for Dec. 19.
USDJPY rose to 154.1468 from 153.6439 at the Monday US close and 153.7907 at the same time Monday morning. Japanese machine tool orders accelerated in October according to data released overnight. The next Bank of Japan meeting is scheduled for Dec. 18-19.
USDCAD rose to 1.3954 from 1.3926 at the Monday US close and 1.3930 at the same time Monday morning. Canada building permits data for September. The next Bank of Canada meeting is scheduled for Dec. 11. Oil Rises on Middle East Tensions, OPEC+ Output Decision
