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By Associated FX Analysis Team

Kantox currency update: US dollar rally loses steam

Published October 10, 2018

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The euro and the pound are picking up on Wednesday, with the US dollar retreating from seven-week highs in absence of relevant macroeconomic events. On a wider perspective, however, the dollar remains strong, supported by a solid economic growth in the US, and the Federal Reserve’s monetary tightening path.

In the UK, the pound appreciated sharply after the release of a Dow Jones report, that suggested advances on the Brexit negotiations and pointed out to an agreement that could be announced next week.

EUR/USD: attempting to regain 1.1500. The euro bounced up on Tuesday and returns to 1.1500 area on Wednesday, after hitting fresh seven-week lows at 1.1430 weighed by concerns about Italian budget. As at London market opening times, the EUR/USD is trading at 1.1505.

GBP/USD: extends recovery past 1.3100. The pound found support at the 1.3000 area on Tuesday and bounced up again, supported by the upbeat news about the Brexit negotiation, that have pushed the pound near 1.3200 ahead of the release of August’s Gross Domestic Product figures. As at London market opening times, the GBP/USD is trading at 1.3180.

USD/JPY: testing support at 112.80. The dollar depreciated for the fourth consecutive day on Tuesday, but it remains supported above 112.80 area so far, with the yen favoured by repatriation flows on investors concerns about the US/China trade rift. As at London market opening times, the USD/JPY is trading at 113.30.

In the Calendar Today

Today in the UK, we see the release of a string of indicators, with special interest on August’s Gross Domestic Product and the Industrial Production. With the Brexit negotiation gathering all the attention, however, the impact of these indicators is likely to be left in the background

In the US the conferences of Fed members Evans and Bostic will be observed with interest to see whether how downbeat US jobs report have affected the Fed’s view that US economy is still far from the neutral interest rate. Any signs of a dovish reaction by the Fed might help the US dollar to extend the correction.

08:30 GMT       GBP: Industrial Production (MoM) (Aug)
Previous: 0.1%                   Expected: 0.1%

08:30 GMT       GBP: Gross Domestic Product (MoM) (Aug)
Previous: 0.3%                   Expected: 0.1%

16:15 GMT       Fed: Evans’ speech

22:00 GMT       Fed: Bostic’s speech

 


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