Dollar Firm Ahead of PMI
The U.S. Dollar is the G10’s top performer, hitting its best level since late July, ahead of preliminary Purchasing Manager’s Index (PMI) numbers for the month of September at 9:45am.
Composite PMI is expected to come in at 55.3, which would indicate continued economic growth, but is a slight reduction from the previous month’s figure of 56. The Organisation for Economic Co-operation and Development (OECD) released a report this morning where they projected that global inflation would run hotter through 2027 than was previously forecast and called for further monetary tightening by major economies as a result. Richmond Fed President Thomas Barkin seemed to agree with that sentiment in a speech given yesterday where he suggested that the Fed’s interest rate hike last week was not enough to curb inflation. These both support a higher-for-longer narrative with regard to interest rates, which has been constructive for the Dollar. Fed Governor Michael Barr is scheduled to speak later today, and Traders are watching closely for further rate signals.
What to Watch This Week…
- Fed Meeting and Presser on Wednesday 2PM
- Bank of Japan Decision on Friday
- USA Online is always open
The complete Economic Calendar can be found here.
EUR
The Euro is down against the Buck this morning, falling to its lowest level in nearly two months and largely shrugging off stronger-than-expected preliminary Purchasing Manager’s Index (PMI) numbers for the month of September. Weakness in the common currency is being driven by a downward repricing in rate hike expectations from the European Central Bank. Gabriel Makhlouf, Governor of the Central Bank of Ireland and ECB policymaker, stated this morning that while he was uncomfortable with the ECB’s inflation outlook being above 3%, secondary effects of energy costs are not yet apparent to policymakers. With oil prices continuing to slide, this could have a meaningful impact on whether the ECB elects to hike in October.
MXN
The Mexican Peso is the worst performer in the G20 this morning after U.S. President Donald Trump endorsed a proposal that could ban the export of diesel fuel in an effort to restrain domestic energy prices. Mexico is particularly reliant on U.S. diesel imports, and a ban would meaningfully disrupt their fuel supply and consequently add significant inflationary pressures to the Mexican economy.