The U.S. dollar looks to finish its stellar week by trading another leg higher against a number of its major counterparts.
Overall, the dollar set a fresh yearly high for a third straight day and has gained for eight straight days. The greenback’s strength came as European and Asian equities were awash in red, erasing gains made yesterday. American shares have seen violent see-saw action this week. For instance, the DOW fell 600 points on Wednesday, rebounded 400 points yesterday and is poised for a drastic fall when trading opens later this morning.
The Australian dollar hit its weakest level since February 2016 after China’s central bank said financing support for some companies will be limited. China is Australia’s largest trading partner.
This morning’s economic docket might give us a look into exactly how strong the U.S. economy is and whether the greenback’s strength is justified over the medium-term. The U.S. economy expanded at a faster pace than expected in the third quarter, registering 3.5% growth and beating expectations of 3.3%. The print is considerably lower than the 4.2% registered in Q2, but is still a strong number. Personal consumption also jumped 4.0%, beating forecasts of 3.3%. Consumer spending accounts for nearly 70% of the economy. The strong data has not helped the greenback in early trading as the dollar approaches key technical levels that may be difficult to break.
What to Watch Today…
- No major events scheduled for today.
The complete economic calendar can be found here.
The Euro fell to fresh two-week lows and flirted with yearly lows against the greenback. The Euro initially pushed higher yesterday morning after the European Central Bank confirmed they “anticipate” ending its QE program in December. However, once ECB President Mario Draghi began to speak, the Euro dropped. Draghi held a mostly positive tone but the overarching risks of Brexit, Italy and trade in general continue to drag on the common currency. Rate expectations for the ECB have softened somewhat this week which attributed to the euro weakness.
The beleaguered sterling is down again this morning and it’s over 2.0% weaker against the greenback this week. With Brexit negotiations on hold, we are unlikely to see any market moving headlines before the weekend. The Bank of England is set to meet next week but policy makers are not expected to make any changes to current policy.