The US Dollar (USD) is trading lower overall to start the day, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
“There are some signs that the October bull run in the DXY is moderating. Short term charts reflect some (minor, so far) softness in price action and the pre-election demand for USD topside protection via risk reversals may be flattening out. This may may point to some stabilization in the broader USD trend—at least ahead of the election itself.”
“The sharp fall in US yields following yesterday’s well-received 7Y auction is extending this morning and is adding to USD headwinds in the short run while stronger than expected Eurozone data has given the EUR a lift. Sterling is a moderate underachiever ahead of the UK budget— but Gilts are outperforming amid generally firmer fixed income markets. Stocks are soft in Europe as markets have been forced to (further) reprice ECB easing expectations after this morning’s data round. US equity futures are firmer, however.”
“It’s another busy day of data releases is the US. ADP data at 8.15ET may shed some light on the impact of weather on hiring this month. Consensus expectations call for hiring to slow to 111k (from 143k in September). The advance Q3 GDP report is expected to show resilient growth (3%) and slowing core PCE inflation (2.1%); that’s Goldilocks-like and could be USD-supportive. Firm data may help keep the DXY from testing technical support at 103.93.”
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