Summary:
The Dollar Index, a popular gauge of the greenback’s value against a basket of 6 major currencies, ended flat at 104.35 after falling to 104.00, its lowest level since September 2023.
A drop in U.S. inflation figures earlier this week failed to push the U.S. currency lower after Cleveland Fed President Loretta Mester said the lower inflation levels were not enough to convince her that the central bank had won its battle against higher prices.
U.S. jobless claims rose to 231,000, the highest level in three months. The rise in jobless claims added to data pointing to some cooling in the labor market.
The Aussie (AUD/USD) underperformed, falling to 0.6470 (0.6510) after Australia’s unemployment rate rose to 3.7% from 3.6% in October. The Kiwi (NZD/USD) slipped to 0.5975 (0.6020).
Sentiment in Asia remained sour on lingering Chinese property concerns. Despite robust Chinese retail sales in October, fixed asset investment slumped to 2.9% from 3.1% previously. The decline in China’s overall spending (which includes real estate) weighed on risk sentiment.
The USD/JPY pair closed at 150.60 after dropping to an overnight low of 150.29. The greenback hit a high of 151.43 yen in choppy conditions. Lower U.S. bond yields weighed on the USD/JPY.
The Euro (EUR/USD) stabilized at 1.0853 from yesterday’s close of 1.0835. The common currency rose to an overnight high of 1.0896 before easing. The British Pound (GBP/USD) was little changed at 1.2410.
Global bond yields were lower. The U.S. 10-year Treasury yield slipped to 4.44% (4.53%). Germany’s 10-year Bund yield fell to 2.59% from 2.64%. Japan’s 10-year JGB yield fell to 0.78% from 0.79%.
Stocks slid on Wall Street. The DOW closed at 34,870 (35,010), while the S&P 500 closed 0.08% lower at 4,503 (4,515). Other global stocks were mixed.
In other economic data released yesterday, US Industrial Production (m/m) fell to -0.7% in October from 0.1% previously and was lower than expectations at -0.3%. US capacity utilization fell to 78.9% from 79.5%. US Manufacturing Production (y/y) fell to -1.7% from -0.9%.
USD/JPY – The dollar initially jumped to an overnight high of 151.43 in volatile trading before easing to 150.60 in late New York trading. The overnight low for the USD/JPY was 150.29. Japan’s 10-year bond yield closed lower at 0.78%, down from 0.87%.
AUD/USD – The Aussie battler was beaten down to 0.6470 at the close, from a previous close of 0.6510. In choppy trading, the overnight high was 0.6517 and the overnight low was 0.6461. Higher U.S. bond yields also weighed on the Aussie.
EUR/USD – The common currency fell to 1.0855 at the close of trading in New York. Earlier in the day, the euro climbed as high as 1.0896 before sliding lower. The overnight low for the EUR/USD was 1.0896, just below the 1.0900 level.
GBP/USD – The British Pound closed little changed at 1.2410 (1.2390). The overnight high for the Pound was 1.2456, while the overnight low was 1.2376. The British currency benefited from a generally weaker Greenback. UK retail sales are due later today.
Outlook:
Expect more volatility in the markets as we enter the last trading day of the week.
Today’s data releases kick off with New Zealand’s Q3 PPI Input (f/c -0.6% vs. -0.2% previously – ACY Finlogix) and New Zealand’s Q3 PPI Output (f/c -0.3% vs. 0.2% previously – ACY Finlogix).
China follows with its FDI (Foreign Direct Investment), which is forecast at -9.7% vs. -8.4% – ACY Finlogix).
The UK starts Europe with UK October Retail Sales (m/m f/c 0.3% vs. -0.9%; y/y f/c -1.5% vs. -1.0% – ACY Finlogix). UK October Core Retail Sales (m/m ex-fuel – f/c 0.4% from -1.0% – ACY Finlogix).
Switzerland follows with its Industrial Production (y/y f/c -1.7% from -0.8% – ACY Finlogix). The Eurozone follows with its final October inflation rate (m/m f/c 0.1% from 0.3%; y/y f/c 4.2% from 4.5% – ACY Finlogix).
Canada kicks off North America with its Canadian PPI for October (m/m f/c 0.3% from 0.4%; y/y f/c -1.2% from 0.6% – ACY Finlogix).
The US will round out today’s data releases with its October Housing Starts (m/m f/c 1.35 million from 1.358 million; m/m -1.3% from 7% – ACY Finlogix), US Preliminary Building Permits for October (1.45 million from 1.471 million; m/m f/c -1.5% from -4.5% – ACY Finlogix).
US Federal Reserve leaders Daly and Collins are scheduled to speak at various events.
