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The US dollar holds weekly gains of 1.4% on the euro and 1.3% on the pound
The US dollar continued its rally against rival currencies, the euro and pound, yesterday as the bleak economic outlook weighs on investor’s minds and US economists keep an eye on political developments.
The pound made marginal gains against the euro yesterday and has continued to climb this morning. The single currency extended its losses, falling to its lowest level against the US dollar since early January, as the US dollar gained 0.6% on Wednesday.
It seems that the Federal Reserve’s “higher-for-longer” policy outlook is still adding fuel to the currency markets. Economists believe that in the short term, the US dollar’s strength will continue.
US durable goods orders rose unexpectedly by 0.2% in August, rebounding from an upwardly revised 5.6% fall in July and beating market expectations of a 0.5% fall. This rise is believed to be led by orders for machinery and non-defence capital goods, which increased by 0.9%.
The number of first-time buyers in the UK has fallen by more than a fifth due to struggles surrounding higher mortgage costs. Halifax reports there were 22% fewer first-time buyers between January and August, compared with the same period last year.
On a similar note, a report from Zoopla revealed more UK home sellers are cutting asking prices to persuade buyers to act. The average asking price discount rose to 4.2% in September, the highest since 2019, equating to a £12,125 reduction.
This afternoon, German inflation is expected to fall from 6.1% to 4.8% in September.
The final US GDP figures for quarter 2 will be released at 1:30 pm (UK time) and markets forecast a 2.1% expansion quarter-on-quarter.
Data releases for tomorrow morning include UK GDP, German retail sales and Euro area inflation. After midday (UK time), US personal spending figures will be released along with core PCE price index data.
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GBP: 27-week low against US dollar
The pound decreased to a 27-week low against the US dollar yesterday after underperforming in recent sessions. However, high interest rates may attract more support for the GBP/USD rate.
GBP/USD: the past year
EUR: Uncertainty remains
When asked when the rate hiking cycle would end, European Central Bank member, Frank Elderson, said, “There is still a lot of uncertainty. That’s why we take these decisions meeting-by-meeting, on a data-dependent basis.”
USD: Threat of governmental shutdown continues
US stock The Dow Jones lost more ground yesterday as the threat of a governmental shutdown loomed. On Tuesday, it lost nearly 400 points after the latest home sales results and shed nearly 110 yesterday.
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