The U.S. Dollar has started the quarter on the front foot, looking to extend gains it found in the third quarter.
The Bloomberg Dollar Index posted its largest quarterly gain in the third quarter since June 2018 and gained for three consecutive months.
The dollar’s overnight strength can be mostly attributed to events abroad, but the U.S. economic docket will have a chance to cement the dollar’s direction later this morning. Markit PMI and ISM manufacturing will be released at 9:45 a,m. and 10 a.m., respectively. A strong reading will contrast greatly with the slowdown in Europe. There are also a number of Fed speakers on today’s docket that warrants monitoring.
What to Watch Today…
- No major events scheduled for today.
Complete Economic Calendar can be found here.
The Euro tried to pull itself off two-year lows overnight but with little success as poor economic data keeps the common currency weak. Euro-area manufacturing recorded its worst month since 2012. The IHS Markit’s manufacturing index came in at 45.7. A reading under 50 indicates a contraction. The downturn was led by a deep decline in Germany which saw its factory gauge drop to 41.7, the lowest since 2009.
A separate report showed that Euro-area inflation slowed to only 0.9% in September, which is less than half of the ECB’s 2.0% goal. The persistently low price pressures will allow the European Central Bank to keep policy loose and even add more stimulus if deemed necessary.
The Australian dollar declined overnight after the Reserve Bank of Australia lowered interest rates. While the move was widely expected (80% chance), the central bank indicated that it may ease again in the near future, pushing the beleaguered currency even lower. AUD/USD is at its weakest level since September 3rd.
The New Zealand dollar followed that Aussie lowers and touched a four-year low versus its American counterpart.