The US dollar traded in a wide range yesterday, initially stumbling amid Omicron fears, before rallying sharply after Federal Reserve Chair Jerome Powell’s tapering comments.
Also exerting some pressure on USD exchange rates through the first half of last week was a dip in US Treasury yields.
This USD selling bias then remained firmly entrenched in mid-week trade, in spite of the latest US consumer price index reported a surprise acceleration of domestic inflation last month.
Whilst the stronger-than-expected inflation reading is likely to make the Federal Reserve more confident in beginning to tighten its monetary policy, with most USD investors having already priced in a November tapering announcement, it failed to provide any lift for the ‘greenback’.
However the US dollar was then able to claw back some of these losses in the latter half of the week, on the back of some positive US data, with new jobless claims falling to a new post-pandemic low in the first week of October, whilst US retail sales printed well above expectations in September.
Turning to this week’s session, a lull in notable USD data releases through the first half of the week may see the direction of the US dollar continue to be primarily driven by risk appetite.
The second half of the week will then see the latest initial jobless claims potentially lend support to the US dollar, if the downtrend in new claims continues.
Although not as influential as the ISM releases, the publication of the latest Markit PMIs could also impact USD exchange rates at the end of this week, potentially buoying the US dollar if they indicate activity in the US private sector improved again this month.
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)