Market Report SUBN

26/09/2018

Dollar Steadies as Lift From Fed Rate Hike Wanes

  • Sterling slides versus majors
  • Euro slightly weaker ahead of Fridays Italian budget proposal
  • Fed raises rates for third time this year as expected

Pound

The pound slipped on Wednesday as investors remained cautious about negotiations between Britain and the EU on a Brexit deal and as broader currency markets waited for an expected Federal Reserve interest rate hike later in the day. After suffering its biggest one-day loss since 2016 on Friday when Prime Minister Theresa May had warned that Brexit negotiations with Brussels had come to an impasse, the pound has traded higher in recent sessions, reflecting some optimism that Britain will secure a deal on its withdrawal from the European Union, due in March. On Wednesday, sterling fell 0.1 percent to $1.3171, still above the $1.3041 low hit on Friday.

No major data.

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Euro

The euro was slightly weaker ahead of tomorrow’s Italian budget proposal. Investors are concerned about whether the proposal will be adhere to European Union rules, as well as about the infighting it has caused in the governing coalition, with some wanting to make good on campaign promises and ratchet up spending, thereby increasing the deficit. The shared eurozone currency last bought $1.1763, little changed from Tuesday in New York.

No major data. Speaker 14.30: ECB President Draghi

Dollar

The dollar steadied against its peers on Thursday as a brief boost from the latest U.S. Federal Reserve interest rate hike faded, with lower U.S. Treasury yields reducing support for the greenback. The dollar index against a basket of six major currencies inched up 0.1 percent to 94.293, adding to modest gains made overnight. The greenback was little changed at 112.73 yen , having slipped from a two-month peak of 113.145 brushed on Wednesday. The euro was up 0.1 percent at $1.1750 after declining 0.2 percent the previous day As expected, the Fed raised interest rates for the third time this year on Wednesday. It still foresees another rate hike in December, three more next year, and one increase in 2020. It also dropped a reference in its statement to the word “accommodative”, although Fed Chairman Jerome Powell later said policy was still accommodative. The Fed has gradually raised rates since late 2015 from a near-zero level.

Data 13.30: Final GDP q/q expected unchanged 4.2% & Core Durable Goods Orders m/m expected 0.4% from 0.1%. Speaker 21.30: Fed Chair Powell.

Pound

The pound slipped on Wednesday as investors remained cautious about negotiations between Britain and the EU on a Brexit deal and as broader currency markets waited for an expected Federal Reserve interest rate hike later in the day. After suffering its biggest one-day loss since 2016 on Friday when Prime Minister Theresa May had warned that Brexit negotiations with Brussels had come to an impasse, the pound has traded higher in recent sessions, reflecting some optimism that Britain will secure a deal on its withdrawal from the European Union, due in March. On Wednesday, sterling fell 0.1 percent to $1.3171, still above the $1.3041 low hit on Friday.

No major data.

Euro

The euro was slightly weaker ahead of tomorrow’s Italian budget proposal. Investors are concerned about whether the proposal will be adhere to European Union rules, as well as about the infighting it has caused in the governing coalition, with some wanting to make good on campaign promises and ratchet up spending, thereby increasing the deficit. The shared eurozone currency last bought $1.1763, little changed from Tuesday in New York.

No major data. Speaker 14.30: ECB President Draghi

Dollar

The dollar steadied against its peers on Thursday as a brief boost from the latest U.S. Federal Reserve interest rate hike faded, with lower U.S. Treasury yields reducing support for the greenback. The dollar index against a basket of six major currencies inched up 0.1 percent to 94.293, adding to modest gains made overnight. The greenback was little changed at 112.73 yen , having slipped from a two-month peak of 113.145 brushed on Wednesday. The euro was up 0.1 percent at $1.1750 after declining 0.2 percent the previous day As expected, the Fed raised interest rates for the third time this year on Wednesday. It still foresees another rate hike in December, three more next year, and one increase in 2020. It also dropped a reference in its statement to the word “accommodative”, although Fed Chairman Jerome Powell later said policy was still accommodative. The Fed has gradually raised rates since late 2015 from a near-zero level.

Data 13.30: Final GDP q/q expected unchanged 4.2% & Core Durable Goods Orders m/m expected 0.4% from 0.1%. Speaker 21.30: Fed Chair Powell.

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