Dollar lower, markets go risk-on as Empire Manufacturing beats expectations
The dollar is lower versus G-10 peers ahead of tomorrow’s Federal Reserve policy decision, where the Fed is expected to maintain a dovish stance. Brexit tensions may weigh on the UK currency, as the latest gridlock in UK-EU trade negotiations results from a new UK proposal that may violate initial terms of the Brexit divorce agreement. Chinese data suggests an economic recovery and the offshore yuan strengthened to 16-month highs.
“Courage is the price that life exacts for granting peace.”
September 15, 2020
EUR/USD 1.1878 GBP/USD 1.2887 USD/CAD 1.3152 AUD/USD 0.7337 USD/JPY 105.31 USD/CNH 6.7745 USD/ILS 3.4219 USD/MXN 21.0450 USD/CHF 0.9063 USD/INR 73.6445
Today begins the Fed’s two-day policy meeting, where a continuing dovish stance is expected following comments that the Fed is shifting to a more relaxed approach to inflation. On the data front, Empire Manufacturing expanded in September at the second fastest pace since 2018, exceeding all forecasts and bolstering optimism on future conditions, and propping up the dollar.GBP
The pound climbed half a percent versus the dollar and approaches its 55-day moving average at $1.2935. The currency rose on better-than-expected jobs data. Brexit tensions continue to escalate as PM Johnson faces opposition within his own party to proposed legislation which would override key elements of the initial Brexit treaty.EUR
The euro was initially higher for a fifth session following the closely-watched German ZEW survey, which boosted risk sentiment. The euro gave up earlier gains following US import and export data, which supported the dollar.CAD
The Canadian dollar rose for a third day amid US dollar declines and ahead of Canadian manufacturing and housing data.ASIA/PACIFIC
The offshore Chinese yuan (CNH) strengthened to 16-month highs after data releases pointed to economic recovery in China. Consumer spending rose for the first time in 2020 in August and industrial production was larger than forecast.
The Aussie dollar rose following comments by Australia's central bank, which indicated no cause for a further cut in interest rates.
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