US dollar fluctuates amid mixed market mood

Philip McHugh November 28th 2023 - 2 minute read

The US dollar traded in a wide range on Monday as demand for the safe-haven currency fluctuated amid a mixed market mood.

Meanwhile, trade in the pound is subdued so far this morning, with GBP/EUR flat at €1.1533 and GBP/USD muted at $1.2619. GBP/CAD has slipped to CA$1.7154, while GBP/AUD and GBP/NZD hold steady at AU$1.9088 and NZ$2.0710, respectively.

Coming up, could a drop in US consumer sentiment act as a headwind for the US dollar this afternoon?

What’s been happening?

The US dollar opened this week on the back foot. USD demand was initially tempered by a risk-on market mood and a drop in US Treasury yields.

However, the ‘greenback’ was able to claw back the bulk of these losses through the second half of the European session as market sentiment began to sour.

In contrast, the euro trended higher on Monday morning as it was supported by its negative correlation with the US dollar. Before coming under pressure later in the day after a speech by European Central Bank (ECB) President Christine Lagarde, in which she warned that the Eurozone economy remains weak.

The pound, meanwhile, trended broadly higher through yesterday’s session as it was supported by Bank of England (BoE) interest rate expectations and a stronger-than-expected UK retail sales report.

What’s coming up?

Kicking off today’s session was the publication of Germany’s latest consumer confidence figures.

These revealed that consumer morale in the Eurozone’s largest economy improved more than expected as we head into December and may provide some support to the euro through the day.

The US will also publish its latest consumer confidence figures later this afternoon. Economists forecast that US consumer sentiment will have deteriorated this month. Could this lead to the US dollar weakening today?

In the meantime, in the absence of any UK data of note, any movement in the pound may be determined by market sentiment. Could a broadly upbeat mood help to bolster the increasingly risk-sensitive currency?

Written by
Philip McHugh

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