Daily Currency Update

USD - US Dollar

The USD has remained fairly stable, showing a slight increase during a quiet overnight session. Despite ongoing tensions in Israel which might have driven a boost in bonds, the uptick in equity markets and the consistent performance of the USD cannot be ignored. US Treasurys are leading the way. Fed Governor Bowman hinted that to control prices, interest rates might need to be raised and sustained for a prolonged period. This seems a bit softer than her previous comments which indicated the need for multiple rate hikes to manage inflation. The US will release major inflation data this week, with predictions suggesting a 0.3% increase in headline PPI for September and a 0.2% monthly rise in core PPI. Annual price forecasts for September remain the same as August at 1.6%. Meanwhile, core prices might see a yearly increase of 2.3%, a slight jump from 2.2% in the previous month. The recent fluctuations in the USD's demeanor make it susceptible to unexpected drops. Comments from yesterday's Fed representatives were limited. However, more from the Fed will be speaking today, such as Waller (voter, at 10.15ET), Bostic (non-voter, 12.15ET), and Collins (non-voter, 16.30ET). Additionally, the minutes from the FOMC meeting on September 20th will be unveiled at 14ET.

CAD - Canadian Dollar

The CAD remains relatively stable. Today's demand for risk assets isn't providing much support to high beta FX, and the decrease in crude prices might be influencing the CAD's sentiment slightly. Despite the highlights from last week's job report, there's a growing skepticism about additional tightening in Canada. Thankfully, the consistent demand for the USD has slowed, allowing the spot to adjust closer to its fair value (1.3531 this morning). Expect the trading range to remain tight for the time being. Observe USD/CAD trends.

EUR - Euro

The EUR has seen minimal change during this session. It has tried to surpass the late September peak of 1.0617 several times in the last day, but advances during early European trade have consistently halted near this mark. The final German CPI for September increased by 0.3% monthly and 4.5% annually. The ECB's inflation projections for August slightly rose to 3.5% over one year and 2.5% over three years, reinforcing the extended high outlook for interest rates. While the challenges for the EUR/USD are evident in terms of yield and growth disparities, it doesn't rule out a potential slight rise, possibly towards the 1.0650/1.0750 range, especially if the USD weakens.

GBP - British Pound

Sterling experienced a slight rise during the overnight trading, briefly surpassing the 1.23 mark. Its ongoing recovery continues to be noteworthy, at least in my opinion. There were no local data releases this morning, though the RICS House Price data for September is scheduled for release later today. The main forces behind the GBP's resurgence seem to be short-covering and position adjustments. Further upward movement in the GBP seems plausible.