The DXY index is trading at 106.60 after a drop of 0.2% during the end of last session.
With a lack of data in the US, the greenback is mainly being moved by geopolitical concerns. The most pressing is the war in Ukraine, where fighting is intensifying after Ukraine fired British cruise missiles at military targets inside Russia on Wednesday.
Federal Reserve Bank of New York President John Williams recently stated that inflation is “not quite there yet.” This has led to swaps market pricing indicating a less than 50% chance the Fed will cut rates in December.
Today’s initial jobless claims data is forecasted at 220K compared to 217K previously. A reading lower than expectations would boost the USD, however with a print above 220K, we would see a drop in the dollar. Tomorrow will feature US PMI data and University of Michigan sentiment.
EURUSD hovers around 1.0550 as the pair continues to face risk-off flows due to the Ukraine-Russia conflict. Potential US tariffs are another cause of concern for the single currency.
Recent comments from ECB policymaker Villeroy de Galhau caused more sentiment towards a rate cut in December. He said that they should continue to reduce the degree of monetary policy restriction due to inflation shifting to the downside.
GBPUSD trades near 1.2650 this morning as the pair stays within the 1.26-1.27 range as traders remain cautious due to geopolitical tensions and a light US economic calendar.
UK CPI data was in line with market expectations, with CPI YoY at 2.3% compared to 2.2% expectations.
Tomorrow’s data features Retail Sales and UK PMI data, with Retail Sales expected at -0.3% and PMI staying relatively flat.
World News
Japanese PM Shigeru Ishiba is set to release a $140 billion economic stimulus package to deal with pressing challenges the country is currently facing. This news arrives as BoJ Governor Kazuo Ueda said he is closely watching foreign exchange impacts on inflation and the economy. This has seen a drop in the yen by 0.6% to 154.56, with further downtrend expected.
