After reaching new highs yesterday, the dollar has sold-off across the board overnight.
Overview
The move comes amidst apparent profit-taking and as developments abroad boosted some of the greenback’s rivals. Overall the Bloomberg Dollar Index fell 0.5%, its biggest daily decline in 15 weeks. Global stocks advanced overnight, a bright sign after global shares experienced their worst month since May 2012 in October.
The Australian and New Zealand dollars rallied after Australia’s trade balance beat estimates. The Swedish krona and the South African rand also gained over a percent against the U.S. dollar.
Weekly jobless claims came in as expected so fundamental traders will have to wait for ISM and Markit manufacturing data both due out at 10 a.m. Non-farm payrolls tomorrow remains the largest risk even on the domestic docket.
What to Watch Today…
- ISM and Markit Manufacturing
The complete economic calendar can be found here.
EUR
The Euro touched a 16-month low yesterday but has seen a reversal of fortunes this morning. The Euro has rallied nearly a percent against the U.S. dollar, bouncing off of yearly lows. The overnight move was the common currency’s biggest climb in six weeks. There was no major fundamental data that provoked the Euro’s pop higher. Analysts are pointing to profit-taking and technical trading. Look for the EUR/USD to try to establish a new trading range after the Euro failed to break below and hold below the yearly low.
GBP
The British pound has rallied overnight by the most in nine months. On “Super Thursday” the Bank of England said that economy may start running hot, meaning interest rates may rise at a faster pace than previously expected. Indeed, futures show that investors have brought forward expectations of an interest rate hike to November of next year. Of course, the central bank warned about the impact of Brexit. At the time of writing, BOE’s Mark Carney is holding a press conference but he has not significantly moved markets more than what had happened overnight.
Adding to the sterling strength was a report that by the Times that a Brexit deal had been reached for the bank. However, both EU and British officials have denied a deal has been reached.
