Connect with us
  • tg

Forex

Dollar bounces off lows; euro hit by weak PMI data

letizo News

Published

on

Investing.com – The U.S. dollar rose Monday, climbing away from the one-year low seen last week, while disappointing economic activity data weighed on the euro. 

At 04:15 ET (08:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.5% higher to 100.925, just above a 12-month low.

Dollar looks to PCE release 

The U.S. dollar has recovered to a degree from the selloff in the wake of the hefty rate cut last week, with traders now appearing to write off the chance of a US recession.

“So far investors have bought into the soft landing narrative offered by Chair Jerome Powell last week,” said analysts at ING, in a note. “And instead of the 50bp rate cut spooking equity markets, key benchmarks have continued to push higher.”

That said, Fed futures traders are now pricing in 75 bps in rate cuts by the end of this year, and nearly 200 bps in cuts by December 2025, according to CME FedWatch.

The major economic data release this week is due on Friday, in the form of the Fed’s preferred inflation gauge, . 

Analysts expect a 0.2% month-on-month rise taking the annual pace to 2.7%, while the headline index is seen slowing to just 2.3%.

“A 0.1% core PCE on Friday could potentially trigger another leg lower in US rates and the dollar,” ING added.

Euro hit by PMI data

In Europe, traded 0.5% lower to 1.1111, after data showed that German business activity contracted in September at its sharpest pace in seven months, suggesting Europe’s largest economy had tipped into recession.

The , compiled by S&P Global, fell to 47.2 from 48.4 in August, below the 48.2 forecast.

The cut rates for the second time this year earlier this month last week, and further signs of economic weakness could lift the chances of another rate cut in October.

“This is not a great environment for the euro, nor for EUR/USD to push above major resistance at 1.12. Further EUR/USD consolidation in a 1.11-1.12 range seems likely, with downside risks early this week,” said ING.

fell 0.4% to 1.3264, handing back some of the pair’s recent gains after last week hitting its highest level since March 2022.

The held its key interest rate at 5% on Thursday, after kicking off its easing with a 25-bp reduction in August.

“There is a sense that long sterling positioning is quite extreme,” said ING. “Yet the latest CFTC data published last Friday and covering activity to last Tuesday (17 September) actually showed quite a large reduction in sterling longs from the speculative community.”

Yuan slips slightly after PBOC cut

traded 0.1% higher to 7.0595, with the yuan slipping after the People’s Bank of China trimmed its 14-day repo rate to further loosen monetary conditions and support economic growth.

fell 0.1% to 143.72, with regional trading volumes muted on account of a Japanese market holiday, although the yen remains close to its strongest levels for 2024. 

The held interest rates steady last week, and said it expected inflation and economic growth to steadily increase.

 

Forex

HSBC lowers EUR-AUD trade target, stop-loss

letizo News

Published

on

HSBC Global Research has adjusted its position on the EUR-AUD currency pair, setting a lower target and stop-loss levels for its sell trade idea.

On the other hand, the firm revised its target down to 1.5690 from its initial position opened on September 20 at 1.6400. The stop-loss was also tightened to 1.6150.

The decision follows a series of negative data impulses from the Eurozone, which have persisted since the trade idea was initiated. Market expectations currently factor in a 25 basis point rate cut by the European Central Bank (ECB) in October.

However, further dovish signals in line with ECB President Lagarde’s comments on September 30 might trigger additional market adjustments. Speculations are brewing that cuts could reach 50 basis points if the current trend continues.

The Eurozone’s fiscal concerns are adding pressure to the euro, as evidenced by the sustained wide spread between the 10-year OAT (French government bonds) and German Bund yields. These factors contribute to the bearish outlook for the euro against the Australian dollar.

In contrast, the Reserve Bank of Australia (RBA) is expected to maintain its current policy stance while other central banks are easing theirs.

HSBC economists also anticipate additional policy stimulus from China, which is likely to benefit the Australian dollar. With the terms of trade shifting in favor of the AUD, HSBC’s analysis suggests that the currency will perform better than the euro.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Continue Reading

Forex

UBS wary of chasing dollar weakness ahead of payrolls

letizo News

Published

on

Investing.com – The price of soared and equity markets suffered weakness in response to the Iranian missile attacks on Israel, but the US dollar gains were more muted, noted UBS, suggesting a market that is not especially over-positioned in short dollar trades.

At 05:20 ET (09:20 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher to 101.020, after gaining about 0.5% in the previous session. 

Tuesday’s soft September data seemingly took precedence over the upside surprise in August data, with 2yr US Treasury yields falling after their release. 

“This was in line with our longstanding view that the market will asymmetrically weight weak US data more strongly than resilient numbers by ascribing more forward looking powers to the former,” analysts at UBS said, in a note dated Oct. 2. “The weakness in the prices paid and employment components in particular are very supportive of Fed rate cuts.”

The soft data were timely for USD bears, given that Monday’s comments by Fed chair Jerome Powell suggesting that rate cuts would go back to 25bp increments from November had allowed a modest USD pullback after sharp losses seen since mid-August, UBS said.

“With Fed officials like Bostic making it clear that further 50bp rate cuts are possible if the jobs market shows signs of real weakness, even before the ISM data it was unlikely that Powell’s comments this week could have a durable impact,” UBS added.

As such, the focus now shifts very clearly onto the September employment data due on Friday. 

UBS economists are looking for headline to bounce back to 180k, above market expectations of 150k, but with the staying at 4.2% – outcomes that argue for a 25bp rate cut at the 7 Nov FOMC rather than another 50bp cut. 

“From our perspective, with spot close enough already to many of our year-end calls, it gets harder to chase general USD weakness at these levels without a firm view that Friday’s jobs numbers will be weak (eg payrolls under 100k without upward revisions to previous months or an unemployment rate of 4.4% or higher),” UBS added.

 

Continue Reading

Forex

Dollar holds gains as war widens in Middle East, rallies against yen

letizo News

Published

on

By Harry Robertson and Tom Westbrook

LONDON/SYDNEY (Reuters) -The dollar held on to its biggest gains in a week on Wednesday after an Iranian missile attack on Israel drove the buying of safe haven assets as investors fretted about the widening of conflict in the Middle East.

It also jumped against the yen as Japanese officials, including new Prime Minister Shigeru Ishiba, talked down the chances of another Bank of Japan rate hike.

The euro was little changed against the dollar at $1.1069, following its largest drop in nearly four months on Tuesday at 0.6%.

The , which tracks the currency against a basket of peers, was also steady at 101.32 after rising 0.5% on Tuesday.

Iran said on Wednesday its missile attack on Israel, its biggest military assault on the Jewish state, was over, barring further provocation, while Israel and the United States said they would retaliate against Tehran.

Israel said Iran fired more than 180 ballistic missiles and Iran’s Revolutionary Guard Corps said the attack was retaliation for Israeli killings of militant leaders and aggression in Lebanon against the Iran-backed armed movement Hezbollah.

The markets’ response to the Middle East tensions thus far has centred on oil prices.

“The oil price does appear to be where the market is taking its steer from (but) even now () is still at $75 a barrel, and that’s far lower than what it was before the summer,” Jane Foley, head of FX strategy at Rabobank, said.

“It is still obviously a primary source of concern. And the market will certainly be keeping one eye on that and one eye on the Fed and the U.S. economy as well.”

In Japan, the dollar was last up 0.77% against the yen at 144.71 yen per dollar.

Bank of Japan Governor Kazuo Ueda avoided repeating the central bank’s pledge to keep raising rates in a speech and focused on the risks facing the economy.

After a meeting with Ueda, new PM Ishiba said Japan is not in an environment for an additional interest rate hike, causing the yen to fall further.

Elsewhere, the safe haven Swiss franc fell around 0.2% to 0.8435 per dollar, after it reversed its morning losses to rise slightly on Tuesday.

Sterling was little changed at $1.3281 after dropping 0.67% the previous day.

The euro’s fall on Tuesday was also driven by increased bets that the European Central Bank will cut interest rates in October, after data showed euro zone inflation fell more than expected to 1.8% in September.

The dollar’s rise was helped by a stronger-than-expected reading on U.S. job openings.

The focus turns to U.S. private payrolls data due later on Wednesday, with traders also monitoring a dispute at U.S. ports. The most important data point of the week is the U.S. employment report for September on Friday.

© Reuters. FILE PHOTO: U.S. Dollar banknotes are seen in this illustration picture taken June 14, 2022. REUTERS/Florence Lo/Illustration/File Photo

East and Gulf Coast dockworkers began their first large-scale strike in nearly 50 years on Tuesday, halting the flow of about half the country’s ocean shipping.

Vice Presidential candidates J.D. Vance and Tim Walz squared off in a nationally televised debate on Tuesday, which was largely civil and was met with muted market response.

Continue Reading

Trending

©2021-2024 Letizo All Rights Reserved