Markets move towards risk-off trading as higher fuel prices cause speculation that there may be a faster pace of policy tightening. Global bond yields are trading higher while stocks are trading lower. Data out of China showed GDP slowing to one-year lows and September factory output missed economic estimates.
Wednesday: UK CPI, Eurozone CPI
Thursday: US Initial Jobless Claims,
Friday: Eurozone Manufacturing PMI, US Manufacturing PMI
October 18, 2021
EUR/USD 1.1598 GBP/USD 1.3731 USD/CAD 1.2370 AUD/USD 0.7403 USD/JPY 114.22 USD/CNH 6.4310 USD/ILS 3.2228 USD/MXN 20.3921 USD/CHF 0.9244 USD/INR 75.3475 USD/BRL 5.5296 USD/SGD 1.3498 USD/DKK 6.4145 USD/SEK 8.6601 USD/NOK 8.4274
USDThe US dollar is trading higher on increased concerns of accelerated inflation which could impact risk appetite. Higher fuel prices are causing speculation that monetary policy will tighten more quickly than initially anticipated.GBP
Money markets have shifted on expectations that the Bank of England will hike interest rates even further. Investors now see 40 bps of tightening in 2021 which will take BOE's key interest rate to 0.5% vs. the expectation of 20 bps just last week.EUR
EUR/USD holds above the 1.16 handle. News out of Europe showed that the European Central Bank is exploring an increase of its debt purchase limit by international bodies from the current 10% cap.CADThe Canadian dollar is the best performing G-10 currency this year, it is up 2.75% vs. the US dollar. The currency pair rebounded from lows of 1.2349 earlier in the trading session remaining below the 1.24 level.ASIA/PACIFIC
USD/JPY is trading slightly higher (about 0.1%) on broader market risk appetite. The New Zealand kiwi is trading lower after strengthening as much as 0.5%. The rally for the kiwi occurred after data showed third quarter annual inflation increased to 4.9% vs. 3.3% for Q2. News of an extended lockdown in the nation is putting downward pressure on the currency.
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