The Dollar finally found its footing this week after comments from Federal Reserve Chair Jerome Powell on Monday. During a casual interview, Powell mentioned that there was no rush to push for aggressive rate cuts before the end of the year, instead the central bank would allow the economy to dictate future monetary policy. For some, the robust 50 bps cut a couple of weeks ago was an indication that more large cuts were on the way, but such expectations have now been tempered. According to FedWatch, a 25 bps rate cut is now far more likely than anything more substantial, although markets will have to wait until the 6th of November to find out.
The Dollar Currency Index maintained momentum during yesterday’s session, gaining 0.45% and reclaiming the 101 level. Cable was forced to cede its recent highs and settle back down to $1.33 and the Euro saw lows of $1.105 yesterday. Despite strength in the greenback, gold climbed 1.1% on Tuesday, completely making up for its losses on Monday and finishing the day over $2,660 an ounce.
Oil prices surged yesterday as tensions in the middle east continued to escalate, notably the Iranian missile strike against Israel. Brent Crude gained over 3% to $74 a barrel, although it remains to be seen whether current developments will have any long-term impact on oil. Manufacturing PMI data continue to be a mixed bag, making it hard to justify more optimistic industrial forecasts.
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