Daily Market Update

Dollar’s Rally Takes a Breather

October 03, 2017

The U.S. dollar continued its momentum from yesterday and rallied overnight, but those gains were quickly given up. The greenback also briefly jumped to a 6-week high against the Euro.

USD

The U.S. dollar continued its momentum from yesterday and rallied overnight, but those gains were quickly given up. The greenback also briefly jumped to a 6-week high against the Euro. Overall, the greenback is trading in familiar ranges from yesterday afternoon. The greenback was given a spark yesterday after ISM manufacturing purchasing managers index popped to a 13-year high.

The U.S. dollar has found strength over the past two weeks as odds have increased that the Federal Reserve will hike interest rates again by the end of the year. Odds currently sit at 67% of a rate hike at the December meeting, up from 46% two weeks ago.

There is no major economic data set for release today, but there are plenty other risk events on this week’s schedule. ADP private jobs data will cross the wires early tomorrow morning. Private hiring is expected to have slowed in September, but a surprise to the upside could lead to dollar strength. Services PMI and ISN Non-manufacturing will round out tomorrow’s economic data. Fed Chair Janet Yellen will speak in the afternoon and her comments will be watched rather closely. Non-farm payrolls will round out the week on Friday. Expectations are low so there seems to be some room for a positive surprise.

 

AUD

The Australian dollar fell against its American counterpart after the Reserve Bank of Australia left interest rates unchanged for a 14th straight month. While the move to keep the cash rate at 1.5% was mostly expected, the Aussie tumbled nevertheless. RBA Governor Phillip Lowe said in a statement that the central bank expects economic growth Down Under to pick up in the future. The central bank also addressed the currency directly saying that the Aussie dollar has appreciated against the greenback since mid-year and the higher exchange rate is “weighing on the outlook for output and employment.”

 

GBP

The British pound remains under pressure and is lower for a third straight day against the U.S. dollar. The pound’s recent slide comes after a report showed that U.K. construction shrank for the first time in over a year. IHS Markit’s gauge of British building activity fell to 48.1 for September, below the estimates for 51.1. 50 or higher indicates expansion.

The poor print was magnified on the back a new political crisis surrounding Brexit. Foreign Secretary and major Brexit supporter Boris Johnson is challenging the Brexit negotiations as he apparently expects Prime Minister Theresa May time as PM to be limited.

Let’s Talk
Ready to save money, save time, and reduce risk?

It’s quick and easy to get started. Fill out the form below and a Tempus market expert will connect with you shortly. Our team will work closely with you to develop a personalized strategy for your global payment & currency needs.

Talk to an Expert