Dollar Strength Persists as EUR Breaks Key Lows and USDJPY Tests 160
The US dollar continued to firm yesterday which has dragged GBP and EUR to lows of 1.3250 and 1.1065 respectively. GBP saw a very limited uptick after this morning’s UK GDP release which came in pretty much as expected which took GBPUSD to around 1.3270. EURUSD is also 20 pips or so off its lows but this latest drop took EURUSD below the May 2025 lows and if we look back beyond there to early 2025, EURUSD was trading down around 1.0200. Don’t think this can’t happen again.
The USD strength has helped take USDJPY back towards 160, so far failing to break that major upside level but worth noting that when we did break up through there in early September we subsequently saw a sharp decline to below 153. Back then there was a lot of intervention talk although any USD selling didn’t pass through to other majors at the time. The move was certainly helped by hawkish comments from Japanese officials and repatriation talk.
Now we have seen dovish comments from BoJs Asada who has said they should wait to see the impact of recent rises before acting again. Asada was one of the BoJ members who voted for no change at the September meeting. Meanwhile Japan’s FX head Mimura has reminded the markets that they remain willing and able to intervene as they did in the summer if they see Yen weakness as excessive. The verbal intervention has done little for now. Watch this space.
Gas works outside here this week which means the gas has been turned off, our central heating is therefore not working today. Not great timing given its pretty chilly outside but I guess I’m saving money! Maybe I’ll tell the family it stays off for a few more days!
England’s footballers are in action against Croatia this evening in the next round of Nations League matches. The two sides met back in early October when England ran out 7-0 winners. Can they recreate that form today? The need just a draw to guarantee they progress to the quarter finals but another hefty win would be great to watch. In other football news, Man Utd manager Carrick is still in his job but it looks more and more likely that he’ll be replaced by ex-Spurs manager Pochettino in the next couple of days.
Today’s calendar brings several central bank officials, I’d imagine we get more of the usual hawkish theme of ‘don’t want to fall behind the curve on tackling inflation’ but we could well see Fed officials push back from talk of a 50bps rise in December.
Have a great day…
- 09.00 ECB economic bulletin
- 13.30 US initial jobless claims
- 14.00 Feds Hammack speaks
- 15.00 US existing home sales
- 15.00 Feds Barr speaks
- 15.30 ECBs Vujcic speaks
- 16.30 Feds Goolsbee speaks
- 18.10 Feds Daly speaks
- 18.30 Feds Schmid speaks
- 19.30 ECBs Lagarde speaks
- 21.30 NZ business PMI
- 23.30 Feds Williams speaks