US dollar is strong and the euro is weak ahead of expected dovish ECB tomorrow
September 11, 2019
The US dollar is strong overnight as US inflation picks up and a general feeling of optimism drives both US equities and bond yields higher. The euro dropped ahead of an expected dovish ECB monetary policy to be announced tomorrow. Today is the 18th anniversary of the 9/11 attacks.
September 11, 2019
EUR/USD 1.0997 GBP/USD 1.2324 USD/CAD 1.3162 AUD/USD 0.6861 USD/JPY 107.72 USD/CNH 7.1105 USD/ILS 3.5445 USD/MXN 19.5558 USD/CHF 0.9935 USD/INR 71.6650
The dollar gained 0.3% overnight. Core PPI increased 2.3% in August, exceeding expectations of 2.1%, helping push US bond yields up over 1.70% - their highest level since early August. The dollar also benefited from the sell-off in the euro in anticipation of a dovish ECB monetary policy announcement tomorrow.GBP
The UK pound edged 0.13% lower, as PM Boris Johnson suffered another defeat: a Scottish court ruled that his decision to suspend Parliament was “unlawful” because it was intended to put Parliament on standstill. The ruling puts the UK government against its Parliament in a constitutional crises that leaves Brexit in confusion.EURThe euro dropped by 0.40%, as the ECB is expected to deliver a dovish monetary policy tomorrow. Anticipated are: a rate cut of 10-20 bps; restarting quantitative easing; offering cheap loans to lenders; and stronger “forward guidance”.CAD
The Canadian dollar barely moved overnight. Today, Prime Minister Justin Trudeau is expected to formally begin Canada’s election campaign. His Liberal Party will be in a tight race with the Conservative Party ahead of the October 21 vote.ASIA/PACIFIC
The Chinese yuan moved little overnight. The market is looking favorably on China’s State Administration of Foreign Exchange (SAFE), which yesterday removed limits on Foreign Direct Investment. This reflects the latest efforts to increase the use of the yuan in international transactions, and a way to attract foreign capital to help balance China's current account.
The Japanese yen continued to weaken, approaching the 108 level for the first time since July. Reduced global tensions has reduced demand for the safe-haven yen.