Dollar Slides as Risk Appetite Improves
The U.S. Dollar is down against major peers this morning as risk appetite has improved and equities have staged a rebound from last week’s selloff.
The S&P, Nasdaq, Tokyo, and Taiwan stock indexes have all gained this morning, subsequently reducing safe-haven demand for the Dollar. Yet unconfirmed reports that Iran has made concessions in its demands regarding control of the Strait of Hormuz amidst ongoing diplomatic efforts have also resulted in a sharp drop in the cost of oil, with Brent Crude trading under $95 per barrel. The U.S. and China have also agreed to extend their trade truce for another two months, with China suspending additional 24% retaliatory tariffs and lifting export restrictions on more than two dozen U.S. companies. Focus now shifts to Consumer Price Index (CPI) numbers for the month of October, which are due to be released at 8:30 tomorrow morning.
What to Watch This Week…
- Consumer Price Index (CPI) for October - Tuesday, 8:30am
- Producer Price Index (PPI) for October - Friday, 8:30am
- Monex USA Online is always open
The complete Economic Calendar can be found here.
NZD
The New Zealand Dollar is the G10’s top performer this morning following this weekend’s election that saw the incumbent National Party emerge as a clear victor after winning more seats than Labour. This has put the National Party in a position to form a new coalition government with center-right minority parties. A National Party led government is seen as more fiscally orthodox, business friendly, and supportive of the Reserve Bank of New Zealand’s current policy stance. The Kiwi Dollar has gained more than a percent on the back of the results.
GBP
The British Pound is up against the Dollar this morning, showing its strongest gain in a week. The Bank of England hiked rates last week, as was widely expected, but subsequent commentary from BoE Governor Andrew Bailey shocked Traders as he indicated that an additional hike is likely necessary and that peak inflation could reach 5% in the U.K. Traders are currently assigning an approximately 56% probability that to the BoE hiking rates again in December but have fully priced that hike in by February. Governor Bailey is scheduled to speak in Zurich today at noon Eastern and Traders will be watching closely for any further guidance with regard to interest rates.