Daily Market Update

Dollar at 16-Month High

October 31, 2018

The U.S. dollar had another impressive performance yesterday and held on to most of its gains overnight. Overall, the dollar is at its best level since May 2017.

Overview

This morning’s economic docket will likely to support the greenback early today. Private companies added the highest number of workers in eight months, beating estimates. ADP private payrolls increased by 227K, beating estimates of a 187K gain. Last month’s print was downwardly revised but the aggregate was an impressive gain. The positive print may foreshadow strong non-farm payrolls on Friday. Economists forecast the economy as a whole added 195K jobs in October.

 

What to Watch Today…

  • No major events scheduled for today.

The complete economic calendar can be found here.

 

EUR

The EUR/USD was heavy again yesterday and was unable to recoup losses overnight. The Euro is only 30 basis points away from its weakest level of the year last touched in mid-August. The Euro is down 2.3% versus the greenback so far in the month of October.

Inflation in the Eurozone met forecasts of 2.2%. Core inflation ticked higher to 1.3% year over year in October, higher than the 1.2% forecast. While on its face, the inflation reading should be slightly positive for the common currency, the budget battle in Italy and political uncertainty following Merkel’s announcement yesterday have overshadowed today’s data. Separately, ECB member Nowotny said the central bank could downwardly revise their economic forecasts at their December meeting.

GBP

The British pound fell drastically during yesterday’s session despite no new news on the Brexit front. Ratings agency S&P did reiterate that a no-deal Brexit risk is now a rating consideration, leading to more downward momentum for the sterling. The beleaguered currency was able to rebound nearly half a percent overnight. The move was not supported by economic fundamentals but may be a result of profit-taking before month end. Despite the bounce overnight, the sterling is headed for its worst month since May. Its monthly loss is currently at 2.2%.

 

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