17/11/2023
US dollar update
USD dollar Summary
The USD Index is trading within a limited range above 104 as the week concludes, after a significant drop to multi-week lows earlier in the week in response to the US inflation data. Additionally, the relatively subdued performance of the dollar aligns with the continuous drop in US yields across various timeframes, fueled by increasing speculation that the Federal Reserve could implement interest rate cuts in the first half of 2024.
Data releases from the United States on Thursday posed a challenge for the US dollar to extend the gains it had made during Wednesday’s recovery. The US Department of Labor indicated that the count of Initial Jobless Claims rose by 13K to reach 231K for the week ending November 11. Additionally, the Federal Reserve’s monthly report disclosed a 0.6% contraction in industrial production for October, following a 0.1% growth in September.
Today, attention will be directed toward US housing starts and building permits. Despite recent statements from Fed officials having minimal impact on expectations regarding the Fed policy cycle, it has been the data that has played a more influential role. The upcoming significant moment for the Fed could be the release of the minutes from the November 1 FOMC meeting, scheduled for release next Tuesday.
Market Views & Opinions
Danske Bank in today’s article “US Labour Market Monitor – Gradual signs of cooling” concludes that “we still believe that the Fed will maintain rates at current restrictive levels, with the first rate cut pencilled in for March 2024. Renewed rise in wage pressures, whether driven by persistent demand, supply recovery losing steam or weaker productivity growth, could push the Fed towards maintaining rates high for longer.”
Scotiabank at the G10 FX Daily report, says regarding the short-term technicals of the EURUSD “The EUR is still effectively consolidating early week gains but firm support for the EUR on dips overnight solidifies the short-term range base at 1.0830. Spot’s consolidation still looks like a pause in the EUR rally ahead of another push higher; in the short run, a move above yesterday’s high around 1.0895 should put the EUR on track for a move to 1.0950/60.”
IMPORTANT DISCLAIMER
The information in this report is of a general nature only. It is not a piece of personal financial advice. It does not take into account your objectives, financial situation, and personal needs.
a-Quant is not responsible for your actions and recommends you contact a licensed financial advisor before acting on any information contained in this general information report.
