The US Dollar (USD) is firmer overall on the session but has nudged off its earlier highs against its major currency peers, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
“Weak Eurozone data dragged on the EUR in European trading, giving the USD a broader lift but the DXY is still trading within last week’s range and the potential for significant USD gains remains limited, at least while markets continue to price in additional, aggressive rate cuts by the Fed before year-end but relief for the USD today is coming from the mild pick up in ECB October easing speculation after this morning’s data reports.”
“There is plenty of US data to contend with this week but they may not have much impact on markets or the USD in the wake of the Fed decision. Friday’s core PCE data is expected to show a 0.2% increase over the month, nudging the Y/Y pace up slightly. With the Fed’s (excluding Bowman, perhaps) attention shifting from prices to jobs, that may not mean much for the USD. There are a number of Fed speakers on the calendar this week, including Chair Powell.”
“Kashkari said he backed the 50bps rate cut and projects a further 50bps in cuts this year. Some consolidation in the USD is possible in the short run after the index failed to push decisively below the 100.5 support area but scope for gains in the DXY is likely limited to the upper 101 area on charts. DXY gains above 102 would, however, suggest a little more strength may emerge.”
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