Dollar stronger to begin week; US domestic policy in focus
The dollar begins the week mildly higher lifted by strong durable goods data and risk sentiment for the US currency. Aussie and CAD outperform vs. the greenback helped by rising commodity prices. The euro didn’t show any major direction following German election. US investors will be laser focused on domestic policy this week, as the House seeks to pass two major spending bills.
This week's economic news:
Monday: US Durable Goods, Dallas Fed Manufacturing
Tuesday: US Consumer Confidence, Wholesale inventories
Wednesday: Mortgage Applications
Thursday: FR and GE CPI, UK Housing
Friday: IT Markit Manufacturing, GE Markit Manufacturing, UK PMI
September 27, 2021
EUR/USD 1.1695 GBP/USD 1.3700 USD/CAD 1.2655 AUD/USD 0.7270 USD/JPY 110.95 USD/CNH 6.4620 USD/ILS 3.2015 USD/MXN 20.1400 USD/CHF 0.9277 USD/INR 73.8400 USD/BRL 5.3350 USD/SGD 1.3537 USD/DKK 6.3580 USD/SEK 8.6950 USD/NOK 8.6010
The dollar is modestly higher to begin the week even as rising energy prices and higher global bond yields pressure traditional haven currencies. US durable goods rose 1.7% MoM, beating expectations and supporting the greenback.
It’s a busy week in the House this week as Pelosi works to pass two packages: the first, a $1T infrastructure bill and the second, a $3.5T spending bill on social safety net, climate change mitigation and education. An inflection point for President Biden’s domestic agenda comes as the government also works to pass a short-term spending bill to avoid a government shutdown Oct 1.GBP
Sterling rose just slightly as UK 5-year inflation rates rise over 4%. BoE Governor Andrew Bailey is expected to speak this week. Traders will listen to his words carefully and will focus on quarter-end activity. Nearby support is just above $1.3600.EUR
The euro fell below $1.1700 as selling pressure is fueled by rising EU bond yields. After 16 years as Chancellor, Angela Merkel did not seek reelection and Olaf Scholz – a Social Democrat - defeated Conservatives in a tight German election. Coalition talks will begin and could last several months. German stocks outperformed this morning on expectations of greater public spending.CAD
A pickup in USD demand helped USD/CAD bounce off 2-week lows. Upside may remain capped, as oil prices continue to rise.ASIA/PACIFIC
JPY selling pressure sends USD/JPY 0.2% higher with YTD highs in sight.
The Australian dollar gained versus the US dollar helped by rising commodity prices and as fears of a China Evergrande meltdown recede.
For more analysis on FX markets or information regarding SVB's FX services:
See all of SVB's latest FX information and commentary at www.svb.com/trends-insights/foreign-exchange-advisory
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