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  • richard evans

Potential for USD to weaken further

Good morning


I perhaps needn’t have worried about the UKs retail sales data, as numbers announced today were not only stronger than expected but the previous reading was revised slightly better. On the other hand, GDP numbers were disappointing which possibly explains why GBP hasn’t really made any significant gains since the announcement.


The US dollar is weaker across the board after much of the economic data released yesterday came in below expectations. EURUSD traded above 1.1000 and has remained within a few pips of that level ever since. Similarly, GBPUSD is within a few pips of 1.2700, which leaves GBPEUR at 1.1535. Yen has also made gains against USD, with USDJPY slipping briefly below 142.00 overnight, now 142.35. BoJ minutes didn’t really add much in the way of market moving news, while Japan inflation numbers slipped lower in line with BoJ thinking. Looking elsewhere, AUDUSD broke above 0.6800 for the first time since July, while Gold is back up to $2050/oz.


We have more US data this afternoon, if we do see another weak set of numbers it could lead to further USD selling into the holidays. We’ve heard from several Fed officials this week who have not only talked of rate cuts but also warned of a slowing economy. Money could be on Fed to be the first major central bank to cut rates. Mind you, UK chancellor Hunt has said that we could see BoE rate cuts in 2024, and that a drop in borrowing rates could see a tax cut around spring time. The Tories will need to pull out a load of good news is they are to retain power in next years general election.


In other news, Apple will stop selling its latest watch in the US over a patent dispute. I believe sales in the UK are unaffected for the time being. In Hong Kong, the Hang Seng index fell sharply as China introduced restrictions on online gaming, with NetEase falling some 25%. Nike shares suffered as they revealed plans to cut costs by US$2bn over the next three years. And Angola has left OPEC after a dispute over output limits.


Lets get the US numbers out of the way this afternoon and we can start to wind down into Christmas. Most of my shopping is done, so I’m feeling pretty smug particularly when I talk to people who will be facing the crowds on Saturday for their last minute purchases. Still, I have no doubt there will be plenty of chores to do around the house instead! Hopefully I’ll catch up on some football over the holiday period, it will be interesting to see if the top of the table changes much into the New Year and of course we have the January transfer window to look forward to as well. I have a feeling we could be in for a fantastic second half of the season.


- 13.30 US Core PCE, personal income/spending, durable goods

- 13.30 CAD GDP

- 15.00 US Michigan sentiment survey



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