The U.S. dollar is under pressure again this morning and is poised for its fourth daily drop, weighed by rising equity markets in Europe.
The dollar is also losing versus commodity-based currencies as the price of oil popped higher on a surprise drop In U.S. stockpiles.
The economic docket showed that U.S. retail sales disappointed. Advanced month over month sales in August came in at 0.6%, missing estimates of a 1.0% gain. The so-called “control group” that strips out food services, car dealers, and building materials, contracted 0.1%. Analysts have been quick to blame the poor number on the expiration of the supplemental jobless benefits at the end of July. The data has only made a slight dent in the risk-on sentiment and has not helped the greenback.
The biggest event of the day is undoubtedly the Fed’s interest rate decision which is due out at 2 p.m. There is almost no chance that the Fed will change its current policy. However, the central bank will release their new economic forecasts, which are likely to show that interest rates will remain at historic lows through 2023. We will also be looking for more clarification on last month’s announcement of a new monetary policy framework. Fed Chief Jay Powell will start his press conference at 2:30 EST, at which time we may see some fireworks and volatility.
What to Watch Today…
- Fed decision at 2 p.m.
- Powell press conference at 2:30 p.m.
Complete Economic Calendar can be found here.
Commodity-based currencies are on the rise today, led by a 0.6% gain for the Norwegian krone. NOK is up 4% over the last two days. The Australian, New Zealand and Canadian dollar are also up nearly half a percent this morning on the jump in commodity prices and general dollar weakness. The price off crude oil is now above $39 a barrel.
After taking a beating to start the month, sterling continued its rebound overnight. GBP/USD is up 1.5% over the last three trading sessions but is still down nearly 4% from its highs on September 1st. Perhaps the sterling’s rise is news surrounding Boris Johnson’s Internal Markets Bill has been quiet. Market participants should continue to keep their eye on the ball. The U.K. now has just under one month to strike a deal with the E.U. or risk a no-deal Brexit. We maintain that sterling gains should be limited ahead of this possible agreement.