The euro fell to a seven-month low against the dollar last week, breaking below 1.0900. Cable fell back below 1.2200, having traded above 1.2300 earlier in the week. Sterling-euro recovered from a drop below 1.2200, having traded above 1.2300 earlier in the week.
Previous Day’s Market Highlights
The euro fell to a seven-month low against the dollar on Friday, breaking below 1.0900. Cable fell back below 1.2200, having traded above 1.2300 earlier in the week. Sterling-euro recovered from a drop below 1.1200 to trade above 1.1250 after London markets closed.
Expectations that the Fed will move on interest rates by the end of the year, likely in December, have contributed to dollar strength. The euro remains relatively under pressure in light of ongoing stimulus from the European Central Bank. The pound continues to be driven by ongoing Brexit uncertainty ahead of the triggering of Article 50 by next March, particularly concerns that the UK will pursue a “hard” Brexit.
The Canadian dollar fell over 0.7% against the pound as CPI and Retail Sales data disappointed, later falling further to trade above 1.6300 after London markets closed. CPI inflation accelerated more slowly than expected to 1.3% from 1.1%, while monthly CPI rose only 0.1%. Retail Sales unexpectedly fell 0.1%, compared to market expectations of a gain, while Core Retail Sales were flat.
After falling below 1.6000 against the Aussie, sterling recovered around 0.8% to break temporarily back above 1.6100. Against the kiwi, the pound tested lows around 1.7000 before returning above 1.7100.
Today’s Market Highlights
This morning’s releases include preliminary Manufacturing and Services PMIs from France, Germany, and the Eurozone as a whole. The French Manufacturing index rose back above The German and Eurozone indices are out at 08:30 and 09:00 BST, respectively. A reading above 50.0 on the Purchasing Mangers’ Index indicates industry expansion.
The Fed will be in focus ahead of next week’s rate-setting meeting with several Fed members scheduled to speak. These include comments from Dudley (14:05 BST), Bullard (14:05 BST), Evans (18:30 BST), and Powell (19:00 BST). Hawkish tones may offer the dollar support while signs of caution ahead of next week’s meeting may instead weigh.
Economic releases out this afternoon include the Chicago Fed National Activity Index (13:30 BST), Canada’s Wholesale Sales (13:30 BST), and Markit’s Preliminary US Manufacturing PMI (14:45 BST).
BoC Governor Poloz speaks later today (20:30 BST).