US Dollar Slides Against GBP, EUR Ahead of Data
The US dollar fell against its major trading partners early Wednesday as markets face another busy day of data releases before the Thanksgiving holiday. The highlight of today’s session will be the release of the US October core PCE deflator, expected at 0.3% month on month, ING says in a note.
Even though the market has largely moved on from the US inflation story, a sticky reading will add to doubts that the Fed needs to cut in December after all. ING analyst Chris Turner expects the dollar to largely hold recent gains, although month-end selling remains a risk.
“We are bullish on the dollar and note that today’s US data set, including confirmation of US third-quarter GDP at 2.8% quarter-on-quarter annualised, will be the last in this holiday-shortened week. In its entirety, the environment looks dollar-bullish to us”.
Durable goods orders for October, the second look at Q3 gross domestic product growth, advance trade for October and weekly jobless claims will all be released Wednesday.
Earlier Wednesday, the Mortgage Bankers Association said mortgage applications were lifted by the first drop in mortgage rates in over two months, with a jump in purchase applications partially offset by a decline in refinancing activity.
The dollar remained reasonably bid on Tuesday as markets digested the US tariff news, while news of a peace deal between Israel and Hezbollah has not affected the market much.
A quick summary of foreign exchange activity heading into Wednesday showed that USDEUR rose to 1.0527 from 1.0481 at the Tuesday US close and 1.0520 at the same time Tuesday morning.
There are no Eurozone data on Wednesday’s schedule, but European Central Bank member Philip Lane is due to speak today. The next European Central Bank meeting is scheduled for Dec. 12.
GBPUSD rose to 1.2610 from 1.2558 at the Tuesday US close and 1.2585 at the same time Tuesday morning. There are no UK data on Wednesday’s schedule. The next Bank of England meeting is scheduled for Dec. 19.
USDJPY fell to 151.4728 from 153.0763 at the Tuesday US close and 153.6124 at the same time Tuesday morning as markets increasingly expect an interest rate increase from the Bank of Japan sooner rather later, particularly if Tokyo consumer prices due for release Thursday are stronger than expected. There were no Japanese data released overnight into Wednesday. The next Bank of Japan meeting is scheduled for Dec. 18-19.
USDCAD fell to 1.4058 from 1.4066 at the Tuesday US close and 1.4079 at the same time Tuesday morning. There are no Canadian data on Wednesday’s schedule. The next Bank of Canada meeting is scheduled for Dec. 11 Naira Sinks as US Dollar Volume in FX Market Dips by 40%
