Daily Currency Update

USD - US Dollar

The USD is mixed, with stock markets seeing minor gains and major bond markets slightly weaker. US Treasury bonds are underperforming, which is providing some moderate support to the dollar. Oil prices are a bit stronger, while copper has declined further in response to disappointing inflation figures from China; their Consumer Price Index decreased by 0.2% year-over-year in October, compared to no change in the previous month. Iron ore prices have increased, however. The Dollar Index (DXY) has made a small gain today, following a flat performance on Wednesday. Comments from the leading Federal Reserve officials yesterday were immaterial, with neither Chair Powell nor John Williams discussing future prospects. Today's events may offer a better chance for officials to more clearly guide market expectations. Non-voting members Barkin and Paese are scheduled to discuss the economic and policy outlook. Fed Chair Powell will participate in an IMF panel to discuss the challenges facing global monetary policy at 14:00 ET. Data on weekly jobless claims will be published at 8:30 ET.

CAD - Canadian Dollar

The CAD is performing relatively well to start today’s session, maintaining its stability against the US dollar from the overnight period. The Bank of Canada's recent summary of the deliberations for the October policy meeting had more impact than usual. The tone of the document was decidedly more hawkish compared to last month's policy statement and press conference, which balanced inflation worries with signs of slowing economic growth. The summary highlighted significant concerns about core inflation and mentioned that some top policymakers believed further interest rate increases might be necessary, while also contemplating the possibility that the neutral rate could rise. This communication has moderated market anticipations for rate reductions next year; the market had priced in approximately 12 basis points of cuts for April as of yesterday, but this has been adjusted to around 8 basis points of easing today.  Observe USD/CAD trends.

EUR - Euro

The EUR is lagging in today's trading, with a slight decline of 0.2% against the US dollar. Weak data from China and an increase in the interest rate differentials between the Eurozone and the US are contributing to the Euro falling below the 1.07 level. Despite efforts by ECB officials, including Vice President de Guindos and Governor Vujcic, to counter market expectations of an early rate cut next year (with April's Overnight Index Swaps indicating a 75% chance of a 25 basis point reduction), their remarks have had minimal effect on the Euro's current value.

GBP - British Pound

The GBP is modestly down in today's trading session. Data from the RICS House Price Balance indicated a small reduction in the number of surveyors reporting a drop in house prices for the three months leading up to September, suggesting that UK interest rates may be approaching their highest point. The index saw a slight uptick to -63 from August's -67, marking the first positive change since April, though the figures remain weak. Bank of England economist Huw Pill noted that current interest rates are sufficiently high to put pressure on inflation, but emphasized that a tight monetary policy must continue to meet the Bank's inflation targets.