The DXY index is trading at 106.30, down from the previous session due to profit-taking following its recent rally.
Downside risk for the greenback is limited, following Fed Chair Powell’s comments on the economy’s resilience, strong labour market, and steady inflationary pressures. He stated, “The economy is not sending any signals that we need to be in a hurry to lower rates.”
US housing data will be released today, focusing on Building Permits and Housing Starts, showing economic development in the housing sector.
EURUSD is trading below 1.06 at the start of the day, with a positive bias as the US dollar follows a downward correction with profit-taking following the recent rally.
ECB President Christine spoke on Monday about Europe’s need to consolidate its resources in defense and climate areas, along with Europe falling behind on innovation and productivity compared to the US and China.
Today the October HICP data will be released, a key indicator to measure inflation and changes in purchasing trends. Prior HICP YoY is 2.9%, with expectations of 3.5%. Prior HICP MoM is 0.1%, with expectations of 0.7%.
EURGBP is trading flat around 0.8355 as investors wait for HICP data. The rising chance for more aggressive rate cuts by the ECB might drag the euro against the pound, but today’s data will be key to any change. If the report shows hotter inflation, this would dampen the chance of an ECB jumbo cut in December and lift the currency.
Cable hovers below 1.2690 as a softer US dollar consolidates losses, with upside resistance at 1.2700.
Later today is the BoE Monetary Policy Report Hearings, where BoE Governor Andrew Bailey and MPC members will respond to questions from the UK Treasury Select Committee. Market pricers will watch for any remarks concerning a rate cut in December.
World News
Rio de Janeiro, Brazil is currently hosting the G20 Summit. Leaders from the main economic powers are meeting to discuss key issues in the global economy.
UK PM Keir Starmer has made the news headlines during this meeting by openly seeking a strong relationship with China and increasing trade ties. This could take the UK back to the “Golden Era” of Chinese-British relations last seen during David Cameron’s PM spell after 2010.
