Update from North America

Dollar Mixed as Data Looms

2 min read

The U.S. Dollar is trading in mixed ranges after the Federal Reserve made the decision to keep interest rates unchanged in the 3.75-4% range yesterday afternoon.

Traders now turn their attention to this morning’s slate of data releases. Personal Consumption Expenditures (PCE) Index numbers for the month of September, Gross Domestic Product (GDP) numbers for the third quarter, and Initial Jobless Claims for the week ending October 24th are all due at 8:30am. Core Month-over-Month PCE and Core Year-over-Year PCE are expected to increase by 0.1% over their August figures to 0.3% and 3.1% respectively. GDP Annualized Quarter-over-Quarter is expected to come in at 3.2%, up from 2.2% previously. Initial Jobless Claims for the week ending October 24th are expected to come in at 198k, in line with the four-week moving average, but up slightly from last week’s print of 194k.

What to Watch This Week…

The complete Economic Calendar can be found here.

EUR

The Euro is down against the Dollar ahead of the European Central Bank’s policy meeting at 9:15am. The ECB is widely expected to keep interest rate on hold at 2.5% today, but the Euro is in a lose-lose position coming out of the decision as the ECB attempts to manage both EU-wide inflation risk and French fiscal risk. Refraining from hiking rates risks letting inflation run out of control, while hiking rates will drive up French bond yields and make it harder for France to get their public debt under control. Despite today’s expected hold, Analysts do expect the ECB to hike rates in December, with an approximately 80% probability of a 25-bps hike at that meeting. Additionally, ECB President Christine Lagarde has announced that she will be stepping down on February 7th, nearly nine months ahead of her slated October 2027 term end. This has injected a fresh dose of uncertainty during a delicate time.

CAD

The Canadian Dollar is a top performer in the G10 this morning following the Bank of Canada’s decision to hike interest rates by 25 bps yesterday. Traders expect the BoC to tighten monetary conditions further over the coming year in response to persistent energy price pressures, but a back-to-back hike in December seems unlikely at this point. The Loonie is getting a further boost this morning from Canada’s position as a major oil exporter given that Brent Crude is trading over $114 per barrel.