Forex
Dollar edges higher, sterling slips ahead of BOE meeting
Investing.com – The U.S. dollar edged higher Thursday, while sterling slips lower ahead of the latest Bank of England’s policy-setting meeting.
At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% higher at 105.122, edging towards last week’s one-month top of 105.80.
Dollar pushes higher after holiday
The U.S. currency pushed higher Thursday after the return of traders following a holiday in the United States.
The U.S. economic data slate includes figures and data later in the session, as investors look for more clues towards when the Federal Reserve will start cutting interest rates.
A series of Fed officials have expressed caution about expecting rate cuts too soon, seeking more evidence that inflation has been tamed before the central bank would agree to easing monetary policy.
“It appears that there is simply not enough confidence in the data to trigger a dovish turn in communication, but markets’ forward-looking nature means that data remains more important than Fed speakers, and the 50bp of cuts priced in by year-end reflects the cautious optimism on disinflation,” said analysts at ING, in a note.
Sterling slips ahead of BOE meeting
fell 0.1% to 1.2699, ahead of the Bank of England’s latest policy-setting later in the session.
The central bank is widely expected to keep interest rates unchanged, even after data released earlier this week showed that annual fell to 2.0%, in line with its medium-term target.
This marked a sharp decline from the 41-year high of 11.1% reached in October 2022, but wage growth and underlying pricing pressure remain a concern for the central bank.
fell 0.2% to 1.0718, with political jitters in the region continuing to weigh on the single currency.
The European Commission said on Wednesday that France and six other countries should be disciplined for running budget deficits in excess of EU limits, with deadlines for reducing the gaps to be set in November.
This comes after French President Emmanuel Macron called a snap election after poor results for his party in European Parliament elections, throwing the EU’s second-biggest economy into political turmoil.
spared 0.7% to 0.8901 after the reduced its key interest rate by 25 basis points, continuing a rate-cutting cycle after March’s reduction.
The decision had been finely balanced, given a recent rebound in economic growth and a break in the trend of gently falling inflation in Switzerland.
Yen remains weak
In Asia, traded 0.2% higher to 158.44, trading at a one-month high with the yen continuing to show weakness after the Bank of Japan took a relatively dovish stance regarding its bond purchases at its recent policy meeting.
traded 0.1% higher at 7.2604, with the Chinese yuan remaining under pressure amid doubts about the strength of the country’s economic recovery.
Forex
Dollar slips from three-month highs; euro gains after PMIs
Investing.com – The U.S. dollar slipped slightly lower Thursday, but remained close to three-month highs underpinned by expectations for a slower pace of interest rate cuts by the Federal Reserve ahead of the upcoming US presidential election.
At 04:05 ET (08:05 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower to 104.095, not far removed from levels last seen at the end of July.
Beige Book helps the dollar
The dollar has been in demand as recent economic data has pointed to the US economy holding up reasonably well, suggesting that the Federal Reserve can be less aggressive in its easing than had previously been expected.
The Federal Reserve’s , released Wednesday, said that economic activity was little changed since early September, while the labor market continued to show signs of strength.
The unchanged outlook on the economy comes amid a string of stronger economic data released recently, including the stronger September jobs report and retail sales.
Markets are currently pricing in just short of 50 basis points of cuts for the rest of the year, pointing to a likely cut of 25 bps in November.
Also helping the US currency is the proximity to the U.S. presidential election, as investors are also increasingly positioning ahead of the poll early next month.
“Volatility will probably rise into the 5 November election,” said analysts at ING, in a note, “and assuming that Donald Trump continues to perform well in the polls, the dollar should stay bid.”
Euro gains after PMI data
In Europe, edged 0.2% higher to 1.0797, with traders digesting the latest economic activity data from the eurozone region.
The news remained grim, with the release falling to 47.3 in October from 48.6 in September, but the offered some hope, with the country’s composite PMI release rising to 48.4 in October, up from 47.5 the previous month and the expected 47.6.
While below 50, and thus still in contraction territory, the data pointed to an improvement in the region’s most important economy.
That said, the has already cut rates three times this year from a record high, and further easing at each of its upcoming meetings this year looks likely.
“With inflation in abeyance and business confidence low, this is fertile ground for the ECB doves,” said ING. “We tentatively see something like a 1.0765-1.0850 EUR/USD range for the time being.”
rose 0.3% to 1.2961, bouncing after the pair dipped to a more than five-week low of in the previous session, ahead of the release of the October UK PMI data.
Yen receives support
fell 0.4% to 152.19, slipping back slightly after climbing to a near three-month high in the prior session.
The yen saw some support after Japanese government officials warned against “one-sided” moves in currency markets, in light of recent weakness in the yen. Their comments spurred some fears of currency market intervention.
fell 0.2% to 7.1111, with the yuan recovering slightly from a near two-month high hit earlier this week, with the focus turning to an upcoming meeting of China’s National People’s Congress for more cues on fiscal spending.
Forex
Asia FX nurses steep losses with yen near 3-mth low; dollar strong
Investing.com– Most Asian currencies steadied from recent losses on Thursday with the Japanese yen remaining close to near three-month lows, while the dollar remained underpinned by expectations of slower interest rate cuts.
Regional currencies were battered by increased risk aversion in markets, as anticipation of a tight U.S. presidential race also kept traders on edge, as did heightened concerns in the Middle East.
Risk aversion benefited the dollar and gold. But the Japanese yen saw little safe haven demand, amid doubts over just how much headroom the Bank of Japan has to keep raising interest rates.
Broader Asian currencies were also skittish as traders awaited more cues on stimulus measures in China.
Japanese yen steadies amid intervention warnings
The Japanese yen’s pair fell slightly on Thursday after racing to a near three-month high in the prior session.
The yen saw some support after Japanese government officials warned against “one-sided” moves in currency markets, in light of recent weakness in the yen. Their comments spurred some fears of currency market intervention.
The yen took few cues from weak data, which showed a contraction in business activity in October.
The yen remained fragile amid growing doubts over more rate hikes by the BOJ, especially in anticipation of Japanese general elections this Sunday.
The ruling Liberal Democratic Party could potentially need to seek a coalition to maintain power, shifting Japan’s political landscape and limiting the BOJ’s ability to make changes in monetary policy.
The BOJ is set to meet next week and is widely expected to keep rates steady. Before that, from Tokyo is due on Friday.
Dollar strong as yields rise amid bets on smaller rate cut
The and fell slightly in Asian trade, but remained close to near three-month highs. Gains in the dollar came tracking a sharp increase in Treasury yields.
The greenback was boosted by growing bets that the Fed will cut rates by a smaller 25 basis points in November, amid persistent signs of resilience in the U.S. economy.
due later in the day is expected to provide more cues on that front.
On the election front, improved odds for Republican nominee Donald Trump also buoyed the dollar, on bets that his policies will be inflationary.
Broader Asian currencies firmed slightly on Thursday as they recouped some recent losses.
The Australian dollar’s pair rose 0.2% after mixed data, while the South Korean won’s pair was flat after weaker-than-expected showed the economy barely grew in the third quarter.
The Chinese yuan’s pair fell 0.2%, recovering slightly from a near two-month high hit earlier this week.
The Singapore dollar’s pair fell 0.1%, while the Indian rupee’s pair fell slightly from near record highs.
Forex
South Korean finance minister views dollar-won near 1,400 as new normal, Yonhap reports
SEOUL (Reuters) – South Korea’s finance minister said the won’s current level near 1,400 per dollar should be regarded as a “new normal”, the Yonhap news agency reported on Wednesday, although the finance ministry later denied the minister made the remark.
Choi Sang-mok, who is also the deputy prime minister for economic affairs, said “the current 1,400 level should be seen as different from the 1,400 in the past,” according to the report.
Choi added that South Korea’s economic conditions did not make it possible to raise interest rates to defend the local currency, in a meeting with reporters accompanying him during a trip to New York, Yonhap reported.
The won has weakened nearly 5% against the dollar this month and earlier on Wednesday hit its lowest level since late July at 1,385.1. It last touched the psychological threshold of 1,400 in mid-April.
Soon after Yonhap’s report, the finance ministry said in a text message: “Deputy Prime Minister Choi Sang-mok did not say that the FX rate of 1,400 won per dollar was the new normal at a meeting with correspondents in New York’s Manhattan on the 22nd.”
About half a dozen outlets reported the comments, but some, including Yonhap, later removed their articles without explanation.
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