US Dollar Remains in Control
Last week was quieter though the US Dollar continued its recent trend. The DXY rose 0.8% to close just above 105 and this 2-month USD rally is now beginning to look overdone.
Euro lost further ground. The sizing US Dollar coupled with further negative Eurozone data especially from Germany is putting the ECB under pressure. Continued high inflation whilst a slew of slowing economic data is giving the Central bank a headache.
GBP is beginning to find itself in the same position as the Euro. A few months ago, we felt that the BoE would have to continue its rate rise cycle as inflation remained stubbornly high. However economic data is showing the UK economy is worsening and any further rate rises could be the tipping point of recession.
Commodity currencies have been weak for a few weeks now. The strong dollar and rising yields as pushed equities lower. Last week was no exception. Both the AUD and NZD lost around 1% whilst the Yen was similarly weak.
Oil continu4es to trade with a spring in its step as further Saudi cuts are expected and the supply side remains very tight. WTI rose a further 1.4% to close above $87.
The week ahead is expected to be far busier than last. We have important economic data in the US CPI which will give the market some direction in where the Fed may be looking going into Q4.
We also have ECB interest rate decision. We expect no change here but s ever the press conference will be more important than the announcement. The devil will be in the detail for going forward.
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